SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ESSEX PROPERTY TRUST, INC.
(Name of Issuer)
SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE
(Title of Class of Securities)
29717810
(Cusip Number)
PATRICK K. FOX
WESTBROOK REAL ESTATE PARTNERS, L.L.C.
13155 NOEL ROAD-LB54
SUITE 2300
DALLAS, TEXAS 75240
(972) 934-0100
with a copy to:
ALLEN CURTIS GREER, II
ROGERS & WELLS
200 PARK AVENUE
NEW YORK, NEW YORK 10166
(212) 878-8232
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
SEPTEMBER 20, 1997
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and isfiling this
schedule because of Rule 13d-1(b) (3) or (4), check the following box.
<square>
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act(however, see
the Notes).
(Page 1 of 23 Pages)
<PAGE>
CUSIP No.29717810 13D Page 2 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
WESTBROOK REAL ESTATE PARTNERS, L.L.C. --I.R.S. IDENTIFICATION NO.
___________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF
0
SHARES
8. SHARED VOTING POWER
BENEFICIALLY
929,610
OWNED BY
9. SOLE DISPOSITIVE POWER
EACH
0
REPORTING
10. SHARED DISPOSITIVE POWER
PERSON WITH
929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
OO
</TABLE>
CUSIP No.29717810 13D Page 3 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
WESTBROOK REAL ESTATE PARTNERS MANAGEMENT I, L.L.C. -- I.R.S. IDENTIFICATION NO.
_____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
OO
</TABLE>
CUSIP No.29717810 13D Page 4 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
WESTBROOK REAL ESTATE FUND I, L.P. -- I.R.S. IDENTIFICATION NO.
___________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
PN
</TABLE>
CUSIP No.29717810 13D Page 5 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
WESTBROOK REAL ESTATE CO-INVESTMENT PARTNERSHIP I, L.P. -- I.R.S. IDENTIFICATION NO.
______________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
PN
</TABLE>
CUSIP No.29717810 13D Page 6 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Gregory H. Hartman -- I.R.S. IDENTIFICATION NO. ____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
</TABLE>
<PAGE>
CUSIP No.29717810 13D Page 7 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Jeffrey M. Kaplan -- I.R.S. IDENTIFICATION NO. ____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
IN
</TABLE>
<PAGE>
CUSIPNo.29717810 13D Page 8 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Paul D. Kazilionis -- I.R.S. IDENTIFICATION NO. ____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
IN
</TABLE>
<PAGE>
CUSIP No.29717810 13D Page 9 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
Jonathan H. Paul -- I.R.S. IDENTIFICATION NO.____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OR ORGANIZATION
United States
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
IN
</TABLE>
<PAGE>
CUSIP No.29717810 13D Page 10 of 23 Pages
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
William H. Walton III -- I.R.S. IDENTIFICATION NO. ____________
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
7. SOLE VOTING POWER
NUMBER OF 0
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 929,610
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH 0
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH 929,610
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
929,610
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.9%
14. TYPE OF REPORTING PERSON
IN
</TABLE>
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $0.0001 par value per share
(the "Common Stock") of Essex Property Trust, Inc., a real estate investment
trust incorporated in the State of Maryland (the "Issuer"). The principal
executive offices of the Issuer are located at 77 California Avenue, Palo Alto,
California 94304.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is being filed by (i) Westbrook Real Estate Fund I,
L.P., a Delaware limited partnership ("WREF I"), (ii) Westbrook Real Estate
Co-Investment Partnership I, L.P., a Delaware limited partnership("WRECIP I"),
(iii) Westbrook Real Estate Partners Management I, L.L.C., a Delaware limited
liability company ("WREM I"), (iv) Westbrook Real Estate Partners, L.L.C., a
Delaware limited liability company ("WREP"), (v) Gregory H. Hartman
("Hartman"), a member of WREP, (vi) Jeffrey M. Kaplan ("Kaplan"), a member of
WREP, (vi) Paul D. Kazilionis ("Kazilionis"), a member of WREP, (vii) Jonathan
H. Paul ("Paul"), a member of WREP, and (viii) William H. Walton III
("Walton"), a member of WREP. WREF I, WRECIP I, WREM I, WREP, Hartman, Kaplan,
Kazilionis, Paul and Walton are sometimes referred to collectively herein as
the "Reporting Persons." The agreement among the Reporting Persons relating to
the joint filing of this statement is attached as Exhibit 7.4 hereto.
The state of organization for each of WREF I, WRECIP I, WREM I, and
WREP is Delaware. Each of Hartman, Kaplan, Kazilionis, Paul and Walton are
citizens of the Unites States. The principal executive offices of WREF I,
WRECIP I, WREM I and WREP are located at 599 Lexington Avenue, Suite 3800, New
York, New York 10022. The principal business address for Kaplan, Paul and
Walton, is 599 Lexington Avenue, Suite 3800, New York, New York 10022. The
principal business address for Hartman is 11150 Santa Monica Boulevard, Suite
1450, Los Angeles, California 90025. The principal business address for
Kazilionis is 284 South Beach Road, Hobe Sound, Florida 33455.
The principal business of WREF I and WRECIP I is to make direct and
indirect investments in real estate and real estate interests. The principal
business of WREM I is to serve as the general partner of each of WREF I and
WRECIP I. The principal business of WREP is to serve as the managing member of
WREM I and as the managing member of other similar funds. The principal
occupations of Hartman, Kaplan, Kazilionis, Paul and Walton are their
activities on behalf of WREP.
During the last five years, none of the Reporting Persons, to the best
knowledge of the Reporting Persons: (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) and (ii) was
a party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which he was or is subject to a judgment, decree or
final order enjoining further violations of or prohibiting or mandating
activities subject to federal or state securities laws or finding any violation
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On July 1, 1996, WREF I and WRECIP I acquired 309,353 and 30,647
shares, respectively, of the Issuer's 8.75% Convertible Preferred Stock, Series
1996A (the "Series 1996A Stock"), for a total purchase price of $8,500,000. On
September 27, 1996, WREF I and WRECIP I acquired 418,536 and 41,463 shares of
the Series 1996A Stock, respectively, in exchange for the cancellation of
certain indebtedness totaling $11,500,000 pursuant to the terms of the Loan
Facility Agreement, dated as of June 20, 1997, among the Issuer and T/W Essex
Funding, L.L.C., a Delaware limited liability company and an affiliate of the
Reporting Persons, and the amendments thereto (the "Loan Facility Agreement"),
attached as Exhibit 7.3 hereto. On June 20, 1997, WREF I and WRECIP I acquired
707,417 and 92,584 shares of the Series 1996A Stock, respectively, for a total
purchase price of $20,000,000. The source of funds for such purchases reported
herein was the Reporting Persons' capital contributions. As of the date of
this filing, WREF I and WRECIP I have acquired 1,600,000 shares of the Series
1996A Stock. No part of the purchase price was or will be represented by funds
or other consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, trading or voting the Series 1996A Stock.
ITEM 4. PURPOSE OF THE TRANSACTION.
WREF I and WRECIP I acquired the Issuer's securities for investment
purposes. The acquisition of the 1,600,000 shares of the Series 1996 A Stock
was made pursuant to the terms of a Stock Purchase Agreement, dated as of June
20, 1996, by and between Tiger/Westbrook Real Estate Fund, L.P. (now known as
Westbrook Real Estate Fund I, L.P.), Tiger/Westbrook Real Estate Co-Investment
Partnership, L.P. (now known as Westbrook Real Estate Co-Investment Partnership
I, L.P.) and the Issuer and the amendments thereto (the "Stock Purchase
Agreement"), filed as Exhibit 7.2 attached hereto, and the Loan Facility
Agreement.
Pursuant to the Articles Supplementary of the Charter of the Issuer
which relate to the Series 1996A Stock (as amended, the "Articles
Supplementary") and filed as Exhibit 7.1 attached hereto, the holders of the
Series 1996A Stock have the right to elect one member of the Board of Directors
of the Issuer. Additionally, upon the occurrence of certain other events, the
holders of the Series 1996A Stock shall have the right to elect additional
directors to the Board of Directors of the Issuer. Consequently, Hartman has
been designated as a member of the Board of Directors of the Issuer and has
been appointed to the Board of Directors by the existing Board of Directors of
the Issuer. According to the terms of the Stock Purchase Agreement, WREF I and
WRECIP I also have certain preemptive rights exercisable upon the issuance by
the Issuer of additional Common Stock.
The Reporting Persons intend to review their holdings with respect to
the Issuer on a continuing basis. Depending on the Issuer's business and
prospects, and upon future developments (including, but not limited to, market
prices of the Series 1996A Stock and the Common Stock and availability and
alternative uses of funds; as well as conditions in the securities markets and
general economic conditions and industry conditions), the Reporting Persons may
acquire other securities of the Issuer; sell all or a portion of their Series
1996A Stock or other securities of the Issuer; now owned or hereafter acquired,
or maintain its position as current levels. Accordingly, the Reporting Persons
reserve the right to acquire additional securities of the Issuer or to dispose
of some or all of the securities of the Issuer beneficially owned by them
either in the open market, in privately negotiated transactions or otherwise,
or take such other action or actions with respect to the Common Stock as they
deem advisable to the extent permitted under applicable federal and state
securities law; however, the Reporting Persons have no present intention of
engaging in any such transaction. Other than as described above, the Reporting
Persons have no plans or proposals which relate to or would result in (a) the
acquisition by any person of additional securities of the Issuer or the
disposition of any such securities, (b) an extraordinary corporate transaction,
such as a merger, reorganization or liquidation, involving the Issuer or any of
its subsidiaries, (c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries, (d) any change in the present management of
the Issuer, (e) any material change in the present capitalization or dividend
policy of the Issuer, (f) any other material change in the Issuer's business or
corporate structure, (g) any other material change in the Issuer's charter,
bylaws or instruments corresponding thereto or other actions which may impede
the acquisition of control of the Issuer by any person, (h) causing a class of
securities of the Issuer to be delisted from a national securities exchange or
to cease to be authorized to be quoted in an inter-dealer quotation system of a
registered national securities association, (i) a class of equity securities of
the Issuer becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934, or(j) any action
similar to any of the enumerated in (a) through (i) above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) WREF I is the record owner of 1,435,306 shares of Series 1996A
Stock. As of the date of this filing, 717,653 shares of WREF I's Series 1996A
Stock are presently convertible into 833,913 shares of Common Stock of the
Issuer (the "WREF Conversion Shares"). The calculation of the number of WREF I
Conversion Shares was determined in accordance with Section 5 of the Articles
Supplementary.
WRECIP I is the record owner of 164,694 shares of Series 1996A Stock.
As of the date of this filing, 82,347 shares of WRECIP I's Series 1996A Stock
are presently convertible into 95,687 shares of Common Stock of the Issuer (the
"WRECIP I Conversion Shares"). The calculation of the number of WRECIP I
Conversion Shares was determined in accordance with Section 5 of the Articles
Supplementary.
Because of their relationship as affiliated entities, both WREF I and
WRECIP I may be deemed to own beneficially both the WREF I Conversion Shares
and the WRECIP I Conversion Shares. As the sole general partner of WREF I and
WRECIP I, WREM I may be deemed to own beneficially the WREF I Conversion Shares
and the WRECIP I Conversion Shares. As the sole managing member of WREM I,
WREP may be deemed to own beneficially the WREF I Conversion Shares and the
WRECIP I Conversion Shares. As the managing members of WREP, Hartman, Kaplan,
Kazilionis, Paul and Walton may be deemed to own beneficially the WREF I
Conversion Shares and the WRECIP I Conversion Shares.
WREF I disclaims beneficial ownership of the WRECIP I Conversion
Shares. WRECIP I disclaims beneficial ownership of the WREF I Conversion
Shares. WREM I, WREP, Hartman, Kaplan, Kazilionis, Paul and Walton each
disclaims beneficial ownership of the WREF I Conversion Shares and the WRECIP I
Conversion Shares.
Each of the Reporting Persons may be deemed to beneficially own 5.9% of
the Issuer's Common Stock, which percentage is calculated based upon (i)
14,909,866 shares of Common Stock reported outstanding by the Issuer on
September 9, 1997, and (ii) that number of shares of Common Stock (929,610)
issuable upon the conversion of the WREF I Series 1996 A Stock and the WRECIP I
Series 1996A Stock.
(b) Number of Shares as to which each such person has
(i) Sole power to vote or direct the vote:
0 shares for each Reporting Person;
(ii) Shared power to vote or direct the vote:
929,610 shares for each Reporting Person;
(iii) Sole power to dispose or to direct the disposition:
0 shares for each Reporting Person;
(iv) Shared power to dispose or to direct the disposition:
929,610 shares for each Reporting Person.
(c) On September 20, 1997, an additional 400,000 shares of Series 1996A
Stock became convertible into 464,805 shares of Common Stock, thereby making
the Reporting Persons the beneficial owners of an aggregate of 929,610 shares
of Common Stock of the Issuer. Except as set forth above, the Reporting
Persons have not effected any transactions in Common Stock directly or
indirectly during the 60 days prior to September 20, 1997 or during the 60 days
prior to the date of this Schedule 13D.
(d) No one other than the Reporting Persons has the right to receive,
or the power to direct the receipt of, dividends from, or the proceeds from the
sale of, the 1,600,00 shares of Series 1996A Stock or any other securities of
the Issuer acquired by the Reporting Persons as described in Item 5.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Except as described herein, to the best knowledge of the Reporting
Persons, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) between the Reporting Persons and any other persons with
respect to any securities of the Issuer, including but not limited to transfer
or voting of any such securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies, or a pledge or contingency the
occurrence of which would give another person voting power over the securities
of the Issuer. The Issuer has granted to the holders of the Series 1996A Stock
registration rights, pursuant to a Registration Rights Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
DESCRIPTION
<S> <C>
7.1 Articles Supplementary of Essex Property Trust, Inc. for the 8.75% Convertible
Preferred Stock, Series 1996A
7.2 Stock Purchase Agreement dated as of June 20, 1996 by and among Essex Property
Trust, Inc. and Tiger/Westbrook Real Estate Fund, L.P. and Tiger/Westbrook
Real Estate Co-Investment Partnership, L.P., as amended by Amendment No. 1 to
Stock Purchase Agreement dated as of July 1, 1996 by and among Essex Property
Trust, Inc. and Tiger/Westbrook Real Estate Fund, L.P. and Tiger/Westbrook
Real Estate Co-Investment Partnership, L.P.
7.3 Loan Facility Agreement dated as of June 20, 1996 between Essex Property
Trust, Inc. and T/W Essex Funding, L.L.C., as amended by Amendment No. 1 to
Loan Facility Agreement dated as of July 1, 1996 by and between Essex Property
Trust, Inc. and T/W Essex Funding, L.L.C.
7.4 Joint Filing Agreement, dated September 29, 1997, by and among WREF I, WRECIP
I, WREM I, WREP, Hartman, Kaplan, Kazilionis, Paul and Walton relating to the
filing of a joint statement on Schedule 13D.
</TABLE>
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
WESTBROOK REAL ESTATE PARTNERS, L.L.C.
By:/S/ PATRICK K. FOX
-----------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
WESTBROOK REAL ESTATE PARTNERS
MANAGEMENT I, L.L.C.
By:/S/ PATRICK K. FOX
-----------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
WESTBROOK REAL ESTATE FUND I, L.P.
By:/S/ PATRICK K. FOX
-----------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
WESTBROOK REAL ESTATE CO-INVESTMENT
PARTNERSHIP I, L.P.
By:/S/ PATRICK K. FOX
-----------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
/S/ GREGORY H. HARTMAN
----------------------------------
Gregory H. Hartman
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
/S/ JEFFREY M. KAPLAN
-------------------------------
Jeffrey M. Kaplan
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
/S/ PAUL D. KAZILIONIS
-------------------------------
Paul D. Kazilionis
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
/S/ JONATHAN H. PAUL
-------------------------------
Jonathan H. Paul
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
/S/ WILLIAM H. WALTON III
-------------------------------
William H. Walton III
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Patrick K. Fox his true and lawful
attorney-in-fact, with full powers of substitution and resubstitution, for
him and in his name, place and stead, in any and all capacities, to sign
this and any and all amendments, to this Schedule 13D, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-
in-fact, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as they might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact or his
substitute may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Schedule 13D has been signed by the following persons in the
capacities and on the date indicated:
September 29, 1997
WESTBROOK REAL ESTATE PARTNERS, L.L.C.
By:/S/ PAUL D. KAZILIONIS
Name: Paul D. Kazilionis
Title: Managing Member
By:/S/ WILLIAM H. WALTON III
Name: William H. Walton III
Title: Managing Member
WESTBROOK REAL ESTATE PARTNERS
MANAGEMENT I, L.L.C.
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By:/S/ PAUL D. KAZILIONIS
Name: Paul D. Kazilionis
Title: Managing Member
By:/S/ WILLIAM H. WALTON III
Name: William H. Walton III
Title: Managing Member
WESTBROOK REAL ESTATE FUND I, L.P.
By: Westbrook Real Estate Partners
Management I, L.L.C., General Partner
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By: /S/ PAUL D. KAZILIONIS
Name: Paul D. Kazilionis
Title: Managing Member
By:/S/ WILLIAM H. WALTON III
Name: William H. Walton III
Title: Managing Member
WESTBROOK REAL ESTATE CO-INVESTMENT
PARTNERSHIP I, L.P.
By: Westbrook Real Estate Partners
Management I, L.L.C., General Partner
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By:/S/ PAUL D. KAZILIONIS
Name: Paul D. Kazilionis
Title: Managing Member
By:/S/ WILLIAM H. WALTON III
Name: William H. Walton III
Title: Managing Member
1
ESSEX PROPERTY TRUST, INC.
ARTICLES SUPPLEMENTARY
Reclassifying 1,600,000 shares of Common Stock
as 1,600,000 shares of
8.75% CONVERTIBLE PREFERRED STOCK, SERIES 1996A
Essex Property Trust, Inc., a corporation organized and existing under
the laws of Maryland (the "Corporation"), does hereby certify to the State
Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority conferred upon the Board of Directors of
the Corporation by Article FIFTH of its Charter (the "Charter") in accordance
with Section 2-105 of the Maryland General Corporation Law (the "MGCL"), the
Board of Directors of the Corporation, at a meeting held on June 26, 1996, duly
adopted a resolution reclassifying 1,600,000 authorized but unissued shares of
Common Stock (par value $.0001 per share) as Preferred Stock (par value $.0001
per share), designating such newly reclassified Preferred Stock as 8.75%
Convertible Preferred Stock, Series 1996A, the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of redemption as set
forth below and authorizing the issuance of such series of Preferred Stock as
set forth below. Upon any restatement of the Charter, Sections 1 through 11 of
this Article FIRST shall become subsection (e) of Article FIFTH of the Charter.
Section 1. Designation and Amount.
Of the 670,000,000 authorized shares of Common Stock,
1,600,000 shares are reclassified and designated 8.75% Convertible Preferred
Stock, Series 1996A (the "Series 1996A Stock").
<PAGE> 2
Section 2. Dividends and Distributions.
(a) Holders of shares of Series 1996A Stock will be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available for the payment of dividends, cumulative cash dividends equal
to the greater of (i) 8.75% of $25.00 per share (such $25.00, the "Stated
Value") per annum (rounded up to the nearest whole cent), payable quarterly, in
arrears, on the 15th day of January, April, July and October of each year,
commencing October 15, 1996 (each a "Dividend Payment Date") or (ii) the
dividend (determined as of the most recent dividend payment date for the Common
Stock) paid with respect to each share of Common Stock multiplied by a fraction
of which the numerator is the Conversion Price in effect as of such Dividend
Payment Date and the denominator of which is the initial Conversion Price. The
dividend will accrue daily on the basis of a 360-day year of twelve 30-day
months, whether or not the Corporation has earnings or surplus, and the dividend
payable to the holder of a share of Series 1996A Stock on the first Dividend
Payment Date after the share is issued will be the accrued dividend calculated
from the day the share is issued to the Dividend Payment Date. If any Dividend
Payment Date is not a Business Day, the dividend due on that Dividend Payment
Date will be paid on the Business Day immediately succeeding that Dividend
Payment Date. As used with regard to the Series 1996A Stock, the term "Business
Day" means a day on which both state and federally chartered banks in New York,
New York are required to be open for general banking business.
(b) Each dividend will be payable to holders of record of the
Series 1996A Stock on a date (a "Record Date") selected by the Board of
Directors which is not less than ten nor more than forty-five days before the
Dividend Payment Date on which the dividend is to be paid. No Record Date will
precede the close of business on the date the Record Date is fixed.
(c) Unless and until all accrued dividends on the Series 1996A
Stock under Section 2(a) through the last preceding Dividend Payment Date have
been paid, the Corporation may not (i) declare or pay any dividend, make any
distribution (other than a distribution payable solely in shares of Common
Stock), or set aside any funds or assets for payment or distribution
2
<PAGE> 3
with regard to any Junior Shares (as herein defined), (ii) redeem or purchase
(directly or through subsidiaries), or set aside any funds or other assets for
the redemption or purchase of, any Junior Shares or (iii) authorize, take or
cause to be taken any action as general partner of Essex Portfolio L.P., a
California limited partnership (the "Operating Partnership"), that will result
in (A) the declaration or payment by the Operating Partnership of any
distribution to its partners (other than distributions payable to the
Corporation as general partner that will be used by the Corporation to fund the
payment of dividends on the Series 1996A Stock (such distributions to the
Corporation being referred to as "Authorized GP Distributions")), or set aside
any funds or assets for payment of any distributions (other than Authorized GP
Distributions) or (B) the redemption or purchase (directly or through
subsidiaries), or the setting aside of any funds or other assets for the
redemption or purchase of, any partnership interests in the Operating
Partnership. As used with regard to the Series 1996A Stock, the term "Junior
Shares" means all shares of Common Stock and all shares of any other class or
series of stock of the Corporation to which the shares of Series 1996A Stock are
prior in rank with regard to payment of dividends.
(d) While any shares of Series 1996A Stock are outstanding,
the Corporation may not pay any dividend, or set aside any funds for the payment
of a dividend, with regard to any shares of any class or series of stock of the
Corporation which ranks on a parity with the Series 1996A Stock as to payment of
dividends unless at least a proportionate payment is made with regard to all
accrued dividends together with all accrued but not yet due dividends (whether
or not authorized) (collectively, "Accrued Dividends") on the Series 1996A
Stock. A payment of dividends with regard to the Series 1996A Stock will be
proportionate to a payment of a dividend with regard to another class or series
of stock if the dividend per share of Series 1996A Stock is the same percentage
of the Accrued Dividends with regard to a share of Series 1996A Stock that the
dividend paid with regard to a share of stock of the other class or series is of
the Accrued Dividends with regard to a share of stock of that other class or
series.
(e) Any dividend paid with regard to shares of Series 1996A
Stock will be paid equally with regard to each outstanding share of Series 1996A
Stock.
3
<PAGE> 4
Section 3. Voting Rights.
The voting rights of the holders of shares of Series 1996A
Stock will be only the following:
(a) (i) The holders of the Series 1996A Stock, voting as a
separate class, shall have the right to elect one director of the Corporation (a
"Series 1996A Director"), in addition to the other directors elected by the
holders of Common Stock (the "Common Directors") or any holders of any other
class or series of stock of the Corporation voting as a separate class with the
holders of the Common Stock.
(ii) The holders of the Series 1996A Stock, voting as a
separate class, shall have the right, as specified below, to elect additional
directors (and to fill vacancies occurring with respect to any director, so
elected by the holders of the Series 1996A Stock) of the Corporation, in
addition to the director elected pursuant to Section 3(a)(i) and in addition to
the other directors elected by the holders of Common Stock or any holders of any
other class or series of stock of the Corporation voting as a separate class
with the holders of the Common Stock.
(A) In the event of a Charter Breach, as
hereinafter defined, the number of directors shall be increased by three
directors, who shall be elected as soon as practicable pursuant to the Charter
by the holders of the Series 1996A Stock, to serve until the next annual meeting
of stockholders and until such directors' successors are elected and qualify. A
Charter Breach shall mean a breach by the Corporation of Sections 3(b) or 3(c)
hereof or any successor provisions contained in any amendment to or restatement
of the Charter.
(B) In the event of a Dividend Default, as
hereinafter defined, or in the event of both a Dividend Default and a Charter
Breach, the number of directors shall be increased by four directors, who shall
be elected as soon as practicable pursuant to the Charter by the holders of the
Series 1996A Stock, to serve until the next annual meeting of stockholders and
until such directors' successors are elected and qualify. A Dividend Default
shall occur if, at any time, dividends are not paid in full with respect to all
shares of Series 1996A Stock on any four
4
<PAGE> 5
Dividend Payment Dates such that dividends due on such four dates have not been
fully paid and are outstanding in whole or in part at the same time.
(C) In the event of a Dividend Default
and/or a Charter Breach, the number of Series 1996A Directors elected at each
subsequent annual meeting of shareholders shall be increased as provided in
subparagraphs A and B above, e.g., if a Charter Breach has occurred, the holders
of Series 1996A Stock shall elect four Series 1996A Directors at subsequent
annual meetings and, if a Dividend Default has occurred, or if both a Dividend
Default and a Charter Breach have occurred, the holders of Series 1996A Stock
shall elect five Series 1996A Directors at subsequent annual meetings, subject
to the classification required by Section 2.3 of the Bylaws.
(iii) The holders of the Series 1996A Stock may
exercise any right under Section 3(a)(i) or (ii) to elect a director either at a
special meeting of the holders of the Series 1996A Stock or at an annual meeting
of the stockholders of the Corporation held for the purpose of electing
directors.
(iv) Whenever the holders of the Series 1996A Stock
have the right under Section 3(a)(i) or (ii) to elect a director, but have not
done so, the Secretary of the Corporation will, upon the written request of the
holders of record of at least 25% of the outstanding shares of Series 1996A
Stock, call a special meeting of the holders of the Series 1996A Stock for the
purpose of electing a director or directors, as the case may be. That meeting
will be held at the earliest practicable date upon the notice required for
annual meetings of stockholders of the Corporation (or such shorter notice as is
agreed to in writing by the holders of all the outstanding shares of Series
1996A Stock before or within ten days after the meeting) at the place specified
in the request for a meeting, or if there is none, at a place in New York, New
York designated by the Secretary of the Corporation. If the meeting has not been
called within fifteen days after delivery of the written request to the
Secretary of the Corporation, or within twenty days after the request is mailed
by registered mail, addressed to the Secretary of the Corporation at the
Corporation's principal office, the holders of record of at least 25% of the
5
<PAGE> 6
outstanding shares of Series 1996A Stock may designate in writing one holder to
call the meeting at the expense of the Corporation, and the meeting may be
called by that person upon the notice required for annual meetings of
stockholders (or such shorter notice as is agreed to in writing by the holders
of all the outstanding Series 1996A Stock before or within ten days after the
meeting). Any holder of Series 1996A Stock or its representatives will have
access to the stock ledger of the Corporation relating to the Series 1996A Stock
for the purpose of causing a meeting of stockholders to be called in accordance
with this Section 3(a)(iv).
(v) A director elected in accordance with Section
3(a)(i) or (ii) will serve until the next annual meeting of stockholders of the
Corporation and until his or her successor is elected and qualified by the
holders of the Series 1996A Stock, except as otherwise provided in the Charter
or Bylaws.
(b) While any shares of Series 1996A Stock are outstanding,
the Corporation will not, directly or indirectly, including through a merger or
consolidation with any other corporation or otherwise, without approval of
holders of at least 66-2/3% of the outstanding shares of Series 1996A Stock,
voting separately as a class, (i) increase the number of authorized shares of
Series 1996A Stock or authorize the issuance or issue of any shares of Series
1996A Stock other than to existing holders of Series 1996A Stock, (ii) increase
the authorized number of shares of or create, reclassify or issue any class or
series of stock ranking prior to or on a parity with the Series 1996A Stock
either as to dividends or upon liquidation, (iii) amend, alter or repeal any of
the provisions of the Charter so as to affect adversely the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption of the Series 1996A Stock, (iv) amend, alter or repeal (a) the final
paragraph of Section 1.11, the final paragraph of Section 1.12, Section 2.2,
Section 3.1, Section 6.7 or Section 8.6 of the Bylaws of the Corporation, (b)
any other provision of the Bylaws relating to nomination, election,
classification, qualification or removal of directors elected by the holders of
Series 1996A Stock or size of the Board or (c) any other provision of the Bylaws
in a manner which would adversely affect the rights of the holders of the
6
<PAGE> 7
Series 1996A Stock, (v) authorize any reclassification of the Series 1996A
Stock, (vi) except as otherwise provided herein, require the exchange of Series
1996A Stock for other securities, or (vii) effect a voluntary liquidation,
dissolution or winding up of the Corporation, the sale of substantially all of
the assets of the Corporation, the merger or consolidation of the Corporation or
the Operating Partnership or recapitalization (except a merger of a wholly-owned
subsidiary of the Corporation into the Corporation in which the Corporation's
capitalization is unchanged as a result of such merger) of more than 40% of the
Corporation's total market capitalization (market value of the Corporation's
equity plus total indebtedness) in a single transaction or a series of related
transactions, provided that successive offerings of the Corporation's equity or
debt to the public shall not be considered related transactions.
(c) While any shares of the Series 1996A Stock are
outstanding, the Corporation and the Operating Partnership will not, directly or
indirectly, including through a merger or consolidation with any other
corporation or otherwise, without the approval of the holders of a majority of
the outstanding shares of Series 1996A Stock, voting separately as a class,
propose, authorize, take, or cause to be taken or allow to occur any of the
following actions: (i) the sale, transfer or assignment, in a single transaction
or series of transactions, of beneficial interests in or voting rights with
respect to assets of the Corporation or the Operating Partnership or any other
person (except that with respect to any such other person in which the
Corporation or Operating Partnership has a minority interest such that a sale,
transfer or assignment is not within the Corporation's or Operating
Partnership's control, this prohibition shall not apply) owned directly or
indirectly by the Corporation to the extent of the Corporation's attributed
interest in such other person, having a fair market value (based on the value of
the total consideration of each such transaction, including, without limitation,
any debt assumed by any purchaser in connection therewith) in excess of
$45,000,000 within any 90-day period or $125,000,000 within any 360-day period;
(ii) the Corporation's termination of the election, or the taking of any action
by the Corporation which would cause termination other than by election, of the
Corporation as a real estate investment trust under the Internal Revenue Code of
1986, as
7
<PAGE> 8
amended; (iii) any alteration in the Corporation's or the Operating
Partnership's business such that (A) less than 65% of the Corporation's or the
Operating Partnership's assets (in terms of book value plus accumulated
depreciation) are located in the States of California, Oregon and Washington,
(B) less than 80% of the Corporation's or the Operating Partnership's assets (in
terms of book value plus accumulated depreciation) are located west of the
Mississippi River or (C) less than 80% of the Corporation's or the Operating
Partnership's assets (in terms of book value plus accumulated depreciation) are
classified as multi-family residential properties; or (iv) any Change in Control
of the Corporation or the Operating Partnership (as defined below).
As used herein, the Corporation shall be deemed to have
allowed a "Change of Control" of the Corporation or the Operating Partnership to
have occurred if any of the following occur: (i) the Corporation takes or fails
to take any action such that it ceases to be required to file reports under
Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor to that Section; (ii) any "person" (as defined in
Sections 13(d) and 14(d) of the Exchange Act) is permitted by the Board or the
Corporation to become the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (a) 30% or more of the
outstanding shares of Common Stock, or (b) 30% (by right to vote or grant or
withhold any approval) of the outstanding securities of any other class or
classes which individually or together have the power to elect a majority of the
members of the Board; (iii) the Board determines to recommend the acceptance of
any proposal set forth in a tender offer statement or proxy statement filed by
any person with the Securities and Exchange Commission which indicates the
intention on the part of that person to acquire, or acceptance of which would
otherwise have the effect of that person acquiring, control of the Corporation;
(iv) other than as a result of the death or disability of one or more of the
directors within a three-month period, a majority of the members of the Board
for any period of three consecutive months are not persons who (a) had been
directors of the Corporation for at least the preceding 24 consecutive months or
were elected by the holders of the Series 1996A Stock, voting separately as a
class, or (b) when they initially were elected to the Board, (x) were nominated
(if they were elected by the
8
<PAGE> 9
stockholders) or elected (if they were elected by the directors) with the
affirmative concurrence of 66-2/3% of the directors who were Continuing
Directors at the time of the nomination or election by the Board and (y) were
not elected as a result of an actual or threatened solicitation of proxies or
consents by a person other than the Board or an agreement intended to avoid or
settle such a proxy solicitation (the directors described in clauses (a) and (b)
of this subsection (iv) being "Continuing Directors"); (v) the Corporation
ceases to be the sole General Partner of the Operating Partnership or grants or
sells to any third party the power to control or direct the actions of the
Operating Partnership as if such third party were a general partner of the
Operating Partnership; or (vi) the Operating Partnership is a party to any
entity conversion or any merger or consolidation in which the Operating
Partnership is not the surviving entity in such merger or consolidation.
Section 4. Liquidation. Upon the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, the holders of
the Series 1996A Stock will be entitled to receive out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, before any distribution is made to holders of any
Junior Shares, an amount per share (the "Liquidation Preference") equal to 105%
of the sum of (i) Stated Value plus (ii) all Accrued Dividends with regard to
the Series 1996A Stock to the date of final distribution (whether or not
declared). If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds of those assets,
available for distribution to the holders of Series 1996A Stock and of shares of
all other classes or series which are on a parity as to distributions on
liquidation with the Series 1996A Stock are not sufficient to pay in full the
Liquidation Preference to the holders of the Series 1996A Stock and any
liquidation preference of all other classes or series which are on a parity as
to distributions on liquidation with the Series 1996A Stock, then the assets, or
the proceeds of those assets, which are available for distribution to the
holders of Series 1996A Stock and of the shares of all other classes or series
which are on a parity as to distributions on liquidation with the Series 1996A
Stock will be distributed to the holders of the Series 1996A Stock and of the
9
<PAGE> 10
shares of all other classes or series which are on a parity as to distributions
on liquidation with the Series 1996A Stock ratably in accordance with the
respective amounts of the liquidation preferences of the shares held by each of
them. After payment of the full amount of the Liquidation Preference, the
holders of Series 1996A Stock will not be entitled to any further distribution
of assets of the Corporation. For the purposes of this Section, neither a
consolidation or merger of the Corporation with another corporation, nor a sale
or transfer of all or any part of the Corporation's assets for cash or
securities, will be considered a liquidation, dissolution or winding-up of the
Corporation.
Section 5. Conversion Into Common Stock.
(a) Optional Conversion. (i) Each holder of shares of Series
1996A Stock will have the right, at the holder's option, to convert all or any
of the shares of Series 1996A Stock held of record by the holder into (A) a
number of fully paid and non-assessable shares of Common Stock (calculated as to
each conversion to the nearest 1/100th of a share) equal to Stated Value plus
the amount, if any, of Accrued Dividends as of the effective date of the
conversion, divided by the Conversion Price then in effect, or (B) such other
securities or assets as the holder is entitled to receive in accordance with
Section 5(e).
(ii) Notwithstanding the provisions of Section
5(a)(i), the shares of Series 1996A Stock shall not be convertible into Common
Stock until June 20, 1997, and beginning on such date a number of shares of
Series 1996A Stock equal to 25% of the authorized shares of Series 1996A Stock,
and then at the beginning of each of the next three three-month periods
thereafter, an additional number of shares equal to 25% of such authorized
shares shall become convertible into Common Stock as provided herein; provided,
further, however, that, in the case of the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, shares of
Series 1996A Stock shall, at the option of the holder thereof, immediately
become convertible into Common Stock as provided herein.
(iii) The holder of each share of Series 1996A Stock
to be converted must surrender the certificate representing that share to the
conversion agent for the Series
10
<PAGE> 11
1996A Stock appointed by the Corporation (which may be the Corporation itself),
with the Notice of Election to Convert on the back of that certificate duly
completed and signed, at the principal office of the conversion agent. If the
shares issuable on conversion are to be issued in a name other than the name in
which the Series 1996A Stock is registered, each share surrendered for
conversion must be accompanied by an instrument of transfer, in form reasonably
satisfactory to the Corporation, duly executed by the holder or the holder's
duly authorized attorney and by funds in an amount sufficient to pay any
transfer or similar tax which is required to be paid in connection with the
transfer or evidence that such tax has been paid.
(b) Mandatory Conversion. If after June 20, 2001, the closing
price of the Common Stock on each of at least 20 Trading Days (as herein
defined) (including the trading day immediately before the Notice of Mandatory
Conversion) out of the preceding period of 30 consecutive Trading Days
immediately prior to the Notice of Mandatory Conversion shall be greater than
the Conversion Price in effect on each of such 20 Trading Days, the Corporation
shall have the right, subject to the right of the holders under Section 7, to
convert all, but not less than all, of the outstanding shares of Series 1996A
Stock into a number of fully paid and non-assessable shares of Common Stock
(calculated as to each conversion to the nearest 1/100th of a share) equal to
Stated Value plus the amount, if any, of Accrued Dividends as of the effective
date of the conversion, divided by the Conversion Price then in effect. In order
to effect the mandatory conversion of the Series 1996A Stock, the Corporation
shall mail a notice (the "Notice of Mandatory Conversion") to all holders of
outstanding shares of Series 1996A Stock on a date (the "Mandatory Conversion
Notice Date") at least 90 but not more than 120 days prior to the conversion
date specified in the Notice of Mandatory Conversion (the "Mandatory Conversion
Date"). If the Corporation gives a Notice of Mandatory Conversion, the
outstanding shares of Series 1996A Stock will be automatically converted into
shares of Common Stock at the close of business on the Mandatory Conversion Date
regardless of whether the holders of shares of Series 1996A Stock actually
surrender the certificates representing their shares of Series 1996A Stock for
conversion. At the close of business on the Mandatory Conversion Date,
11
<PAGE> 12
(i) the certificates representing the shares of Series 1996A Stock will cease to
represent anything other than the right to receive the shares of Common Stock
into which the shares of the Series 1996A Stock were automatically converted and
(ii) the Corporation may, at its option (the exercise of which will be described
in the Notice of Mandatory Conversion), either (A) deliver certificates
representing the shares of Common Stock to which the holders of the Series 1996A
Stock are entitled without requiring the surrender of the certificates which
formerly represented shares of Series 1996A Stock, or (B) deliver certificates
representing the shares of Common Stock when the holder surrenders the
certificates which formerly represented the Series 1996A Stock and complies with
the other requirements of subparagraph 5(a)(iii).
(c) Conversion Procedures. (i) The effective time of the
conversion under Section 5(a) shall be immediately prior to the close of
business on the day when all the conditions in Section 5(a)(iii) have been
satisfied. The effective time of the conversion under Section 5(b) shall,
subject to the rights of holders under Section 5(a) and Section 7, be
immediately prior to the close of business on the Mandatory Conversion Date.
(ii) If shares are surrendered between the close of
business on a dividend payment Record Date and the opening of business on the
corresponding Dividend Payment Date ("Ex Record Date Shares"), the dividend with
respect to those shares will be payable on the Dividend Payment Date to the
holder of record of the Ex Record Date Shares on the dividend payment Record
Date notwithstanding the surrender of the Ex Record Date Shares for conversion
after the dividend payment Record Date and prior to the Dividend Payment Date.
The Corporation will make no payment or adjustment for Accrued Dividends on Ex
Record Date Shares, whether or not in arrears, or for dividends on the shares of
Common Stock issued upon conversion of the Ex Record Date Shares, other than to
make payment to the holder of record thereof on the Record Date. The provisions
of this Section 5(c)(ii) shall not limit the obligation of the Corporation to
issue shares of Common Stock in conversion of shares of Series 1996A Stock,
including Ex Record Date Shares, at Stated Value plus Accrued Dividends, as
elsewhere provided in these Articles.
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<PAGE> 13
(iii) Except as otherwise permitted in clause (ii)(B)
of the last sentence of Section 5(b), as promptly as practicable after the
effective time for conversion of shares of Series 1996A Stock, the Corporation
will issue and will deliver to the holder at the office of the conversion agent,
or on the holder's written order, a certificate or certificates representing the
number of full shares of Common Stock issuable upon the conversion of the shares
of Series 1996A Stock. Any fractional interest in respect of a share of Common
Stock arising upon a conversion will be settled as provided in Section 5(d).
(iv) Each conversion will be deemed to have been
effected at the effective time provided in Section 5(c)(i), and the person in
whose name a certificate for shares of Common Stock is to be issued upon a
conversion will be deemed to have become the holder of record of the shares of
Common Stock represented by that certificate at such effective time. All shares
of Common Stock delivered upon conversion of Series 1996A Stock will upon
delivery be duly and validly issued and fully paid and nonassessable, free of
all liens and charges and not subject to any preemptive rights. The shares of
Series 1996A Stock so converted will no longer be deemed to be outstanding and
all rights of the holder with respect to those shares will immediately
terminate, except the right to receive the shares of Common Stock or, if
applicable, other securities, cash or other assets to be issued or distributed
as a result of the conversion.
(d) Fractional Shares. No fractional shares of Common Stock
will be issued upon conversion of shares of Series 1996A Stock. Any fractional
interest in a share of Common Stock resulting from conversion of shares of
Series 1996A Stock will be paid in cash (computed to the nearest cent) based on
the Current Market Price (as herein defined) of the Common Stock on the Trading
Day next preceding the day of conversion. If more than one share of Series 1996A
Stock is surrendered for conversion at substantially the same time by the same
holder, the number of full shares of Common Stock issuable upon the conversion
will be computed on the basis of all the shares of Series 1996A Stock
surrendered at that time by that holder.
13
<PAGE> 14
(e) Conversion Price. The "Conversion Price" per share of
Series 1996A Stock will initially be $21.875, and will be adjusted as follows
from time to time if any of the events described below occurs:
(i) If the Corporation (A) pays a dividend or makes a
distribution on its Common Stock in shares of its Common Stock, (B) subdivides
its outstanding Common Stock into a greater number of shares, or (C) combines
its outstanding Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to that event will be reduced so that the
holder of a share of Series 1996A Stock surrendered for conversion after that
event will receive the number of shares of Common Stock which the holder would
have received if the share of Series 1996A Stock had been converted immediately
before the happening of the event (or, if there is more than one such event, if
the share of Series 1996A Stock had been converted immediately before the first
of those events and the holder had retained all the Common Stock or other
securities or assets received after the conversion). An adjustment made pursuant
to this Section 5(e)(i) will become effective immediately after the record date
in the case of a dividend or distribution, and will become effective immediately
after the effective date in the case of a subdivision or combination. If such
dividend or distribution is declared but is not paid or made, the Conversion
Price then in effect will be appropriately readjusted. However, a readjustment
of the Conversion Price will not affect any conversion which takes place before
the readjustment.
(ii) If the Corporation issues rights or warrants to
the holders of its Common Stock as a class entitling them to subscribe for or
purchase Common Stock at a price per share less than the Conversion Price at the
record date for the determination of stockholders entitled to receive the rights
or warrants, the Conversion Price in effect immediately before the issuance of
the rights or warrants will be reduced in accordance with the equation set forth
on Exhibit A hereto, which is hereby incorporated by reference herein. The
adjustment provided for in this Section 5(e)(ii) will be made successively
whenever any rights or warrants are issued, and will become effective
immediately after each record date. In determining whether any rights or
14
<PAGE> 15
warrants entitle the holders of the Common Stock to subscribe for or purchase
shares of Common Stock at less than the Conversion Price, and in determining the
aggregate sale price of the shares of Common Stock issuable on the exercise of
rights or warrants, there will be taken into account any consideration received
by the Corporation for the rights or warrants, with the value of that
consideration, if other than cash, to be determined by the Board of Directors of
the Corporation (whose determination, if made in good faith, will be
conclusive). If any rights or warrants which lead to an adjustment of the
Conversion Price expire or terminate without having been exercised, the
Conversion Price then in effect will be appropriately readjusted. However, a
readjustment of the Conversion Price will not affect any conversions which take
place before the readjustment.
(iii) If the Corporation distributes to the holders
of its Common Stock as a class any shares of stock of the Corporation (other
than Common Stock) or evidences of indebtedness or assets (other than cash
dividends or distributions) or rights or warrants (other than those referred to
in Section 5(e)(ii)) to subscribe for or purchase any of its securities, then,
in each such case, the Conversion Price will be reduced so that it will equal
the price determined by multiplying the Conversion Price in effect immediately
prior to the record date for the distribution by a fraction of which the
numerator is the Current Market Price of the Common Stock on the record date for
the distribution less the then fair market value (as determined by the Board of
Directors, whose determination, if made in good faith, will be conclusive) of
the stock, evidences of indebtedness, assets, rights or warrants which are
distributed with respect to one share of Common Stock, and of which the
denominator is the Current Market Price of the Common Stock on that record date.
Each adjustment will become effective immediately after the record date for the
determination of the stockholders entitled to receive the distribution. If any
distribution is declared but not made, or if any rights or warrants expire or
terminate without having been exercised, effective immediately after the
decision is made not to make the distribution or the rights or warrants expire
or terminate, the Conversion Price then in effect will
15
<PAGE> 16
be appropriately readjusted. However, a readjustment will not affect any
conversions which take place before the readjustment.
(iv) If the Corporation issues or sells (or the
Operating Partnership issues or sells) any equity or debt securities which are
convertible, directly or indirectly, into or exchangeable for shares of Common
Stock ("Convertible Securities") or any rights, options (other than the issuance
or exercise after the date hereof of stock options covering no more than 715,400
shares of Common Stock, subject to appropriate adjustment to the extent that the
Corporation (A) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock, (B) subdivides its outstanding Common Stock into a
greater number of shares, or (C) combines its outstanding Common Stock into a
smaller number of shares, issued to employees or directors of the Corporation or
its subsidiaries under the Corporation's existing employee stock incentive
plans) or warrants to purchase Common Stock at a conversion, exchange or
exercise price per share which is less than the Conversion Price, unless the
provisions of Section 5(e)(ii) or (iii) are applicable, the Corporation will be
deemed to have issued or sold, on the later of the date on which the Convertible
Securities, rights, options or warrants are issued or the date on which they
first may be converted, exchanged or exercised, the maximum number of shares of
Common Stock into or for which the Convertible Securities may then be converted
or exchanged or which are then issuable upon the exercise of the rights, options
or warrants immediately prior to the close of business on the later of the date
on which the Convertible Securities, rights, options or warrants are issued or
the date on which they may first be converted, exchanged or exercised, and the
Conversion Price shall be adjusted downward as if it were an event covered by
Section 5(e)(v). However, no further adjustment of the Conversion Price will be
made as a result of the actual issuance of shares of Common Stock upon
conversion, exchange or exercise of the Convertible Securities, rights, options
or warrants. If any Convertible Securities, rights, options or warrants to which
this Section applies are redeemed, retired or otherwise extinguished or expire
without any shares of Common Stock having been issued upon conversion, exchange
or exercise thereof, effective immediately after
16
<PAGE> 17
the Convertible Securities, rights, options or warrants expire, the Conversion
Price then in effect will be readjusted to what it would have been if those
Convertible Securities, rights, options or warrants had not been issued.
However, a readjustment will not affect any conversion which takes place before
the readjustment. For the purposes of this Section 5(e)(iv), (x) the price of
shares of Common Stock issued or sold upon conversion or exchange of Convertible
Securities or upon exercise of rights, options or warrants will be (A) the
consideration paid to the Corporation for the Convertible Securities, rights,
options or warrants, plus (B) the consideration paid to the Corporation upon
conversion, exchange or exercise of the Convertible Securities, rights, options
or warrants, with the value of the consideration, if other than cash, to be
determined by the Board of Directors of the Corporation (whose determination, if
made in good faith, will be conclusive) and (y) any change in the conversion or
exchange price of Convertible Securities or the exercise price of rights,
options or warrants will be treated as an extinguishment, when the change
becomes effective, of the Convertible Securities, rights, options or warrants
which had the old conversion, exchange or exercise price and an immediate
issuance of new Convertible Securities, rights, options or warrants with the new
conversion, exchange or exercise price.
(v) If the Corporation issues or sells any Common
Stock (other than on conversion or exchange of Convertible Securities or
exercise of rights, options or warrants to which Section 5(e)(ii), (iii) or (iv)
applies) for a consideration per share less than the Conversion Price on the
date of the issuance or sale (or on exercise of options or warrants, for less
than the Conversion Price on the day the options or warrants are issued), upon
consummation of the issuance or sale, the Conversion Price in effect immediately
prior to the issuance or sale will be reduced in accordance with the equation
set forth on Exhibit A hereto, which is hereby incorporated by reference herein.
(vi) If there is a reclassification or change of
outstanding shares of Common Stock (other than a change in par value, or as a
result of a subdivision or combination), or a merger or consolidation of the
Corporation with any other entity that results in a
17
<PAGE> 18
reclassification, change, conversion, exchange or cancellation of outstanding
shares of Common Stock, or a sale or transfer of all or substantially all of the
assets of the Corporation, upon any subsequent conversion of Series 1996A Stock,
each holder of the Series 1996A Stock will be entitled to receive the kind and
amount of securities, cash and other property which the holder would have
received if the holder had converted the shares of Series 1996A Stock into
Common Stock immediately before the first of those events and had retained all
the securities, cash and other assets received as a result of all those events.
In the event that a transaction may be viewed as causing this Section 5(e)(vi)
to be applicable and 5(e)(iii) is also applicable, then Section 5(e)(iii) will
be applied and this Section 5(e)(vi) will not be applied.
(vii) For the purpose of any computation under this
Section 5(e), the "Current Market Price" of the Common Stock on any date will be
the average of the last reported sale prices per share of the Common Stock on
each of the twenty consecutive Trading Days (as defined below) preceding the
date of the computation. The last reported sale price of the Common Stock on
each day will be (A) the last reported sale price of the Common Stock on the
principal stock exchange on which the Common Stock is listed, or (B) if the
Common Stock is not listed on a stock exchange, the last reported sale price of
the Common Stock on the principal automated securities price quotation system on
which sale prices of the Common Stock are reported, or (C) if the Common Stock
is not listed on a stock exchange and sale prices of the Common Stock are not
reported on an automated quotation system, the mean of the high bid and low
asked price quotations for the Common Stock as reported by National Quotation
Bureau Incorporated if at least two securities dealers have inserted both bid
and asked quotations for the Common Stock on at least five of the ten preceding
Trading Days. If the Common Stock is not traded or quoted as described in any of
clause (A), (B) or (C), the Current Market Price of the Common Stock on a day
will be the fair market value of the Common Stock on that day as determined by a
member firm of the New York Stock Exchange, Inc. selected by the Board of
Directors. As used with regard to the Series 1996A Stock, the term "Trading Day"
means (x) if the Common Stock is listed on at least one stock exchange, a day on
which there is trading on the
18
<PAGE> 19
principal stock exchange on which the Common Stock is listed, (y) if the Common
Stock is not listed on a stock exchange, but sale prices of the Common Stock are
reported on an automated quotation system, a day on which trading is reported on
the principal automated quotation system on which sales of the Common Stock are
reported, or (z) if the Common Stock is not listed on a stock exchange and sale
prices of the Common Stock are not reported on an automated quotation system, a
day on which quotations are reported by National Quotation Bureau Incorporated.
(viii) No adjustment in the Conversion Price will be
required unless the adjustment would require a change of at least 1% in the
Conversion Price; provided, however, that any adjustments which are not made
because of this Section 5(e)(viii) will be carried forward and taken into
account in any subsequent adjustment; and provided, further, that any adjustment
must be made in accordance with this Section 5 (without regard to this Section
5(e)(viii)) not later than the time the adjustment may be required in order to
preserve the tax-free nature of a distribution to the holders of shares of
Common Stock. All calculations under this Section 5 will be made to the nearest
cent or to the nearest one hundredth of a share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the
Corporation will promptly send each holder of record of Series 1996A Stock a
notice of the adjustment of the Conversion Price setting forth the adjusted
Conversion Price and the date on which the adjustment becomes effective and
containing a brief description of the events which caused the adjustment.
(f) If any one of the events in Sections 5(e)(i) through
5(e)(vi) occurs, then the Corporation will mail to the holders of record of the
Series 1996A Stock, at least 15 days before the applicable date specified below,
a notice stating the applicable one of (i) the date on which a record is to be
taken for the purpose of the dividend, distribution or grant of rights or
warrants, or, if no record is to be taken, the date as of which the holders of
Common Stock of record who will be entitled to the dividend, distribution or
rights or warrants will be determined, (ii) the date on which it is expected the
Convertible Securities will be issued or the date on which the change in the
conversion, exchange or exercise price of the Convertible Securities, rights,
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<PAGE> 20
options or warrants will be effective, (iii) the date on which the Corporation
anticipates selling Common Stock for less than the Conversion Price on the date
of the sale (except that no notice need be given of the anticipated date of sale
of Common Stock upon exercise of options or warrants which have been described
in a notice to the holders of record of the Series 1996A Stock given at least 15
days before the options or warrants are exercised), or (iv) the date on which
the reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon the reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up. Failure to
give any such notice or any defect in the notice will not affect the legality or
validity of the reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up.
(g) (i) The Corporation will at all times reserve and keep
available, free from preemptive rights, out of the authorized but unissued
shares of Common Stock, for the purpose of effecting conversion of the Series
1996A Stock, the maximum number of shares of Common Stock which the Corporation
would be required to deliver upon the conversion of all the outstanding shares
of Series 1996A Stock. For the purposes of this Section 5(g)(i), the number of
shares of Common Stock which the Corporation would be required to deliver upon
the conversion of all the outstanding shares of Series 1996A Stock will be
computed as if at the time of the computation all the outstanding shares of
Series 1996A Stock were held by a single holder.
(i) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value (if any) of
the shares of Common Stock deliverable upon conversion of the Series 1996A
Stock, the Corporation will take all corporate action which may, in the opinion
of its counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and non-assessable shares of Common Stock at the
adjusted Conversion Price.
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<PAGE> 21
(ii) The Corporation will seek to list the shares of
Common Stock required to be delivered upon conversion of the Series 1996A Stock,
prior to the delivery, upon each national securities exchange, if any, upon
which the outstanding shares of Common Stock are listed at the time of delivery.
(h) The Corporation will pay any documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Common Stock on conversion of Series 1996A Stock; provided, however, that the
Corporation will not be required to pay any tax which may be payable in respect
of any transfer involved in the issue or delivery of shares of Common Stock in a
name other than that of the holder of record of the Series 1996A Stock to be
converted and no such issue or delivery will be made unless and until the person
requesting the issue or delivery has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that the
tax has been paid.
Section 12. Status.
Upon any conversion, exchange or redemption of shares of
Series 1996A Stock, the shares of Series 1996A Stock which are converted,
exchanged or redeemed will be reclassified as authorized and unissued shares of
Common Stock, and the number of shares of Series 1996A Stock which the
Corporation will have authority to issue will be decreased by the conversion,
exchange or redemption of shares of Series 1996A Stock, so that the shares of
Series 1996A Stock which were converted, exchanged or redeemed may not be
re-issued.
Section 13. Redemption after Notice of Mandatory Conversion.
(a) Notwithstanding anything to the contrary contained in
Section 5(b), each holder of Series 1996A Stock will have the right, exercisable
at any time after the Mandatory Conversion Notice Date but prior to the
Mandatory Conversion Date, to require the Corporation to redeem any or all the
shares of Series 1996A Stock owned of record by the holder, at a redemption
price per share (the "Redemption Price") equal to the Redemption Percentage as
defined below, multiplied by the sum of (i) Stated Value plus (ii) the sum of
all Accrued Dividends with regard to the Series 1996A Stock through the
Redemption Date, as herein
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<PAGE> 22
defined. As used herein, the "Redemption Percentage" shall mean the percentage
specified in the following table:
<TABLE>
<CAPTION>
Redemption
Redemption Date Percentage
--------------- ----------
<S> <C> <C>
Section 7. June 20, 2001 to June 19, 2002 105
Section 8. June 20, 2002 to June 19, 2003 104
Section 9. June 20, 2003 to June 19, 2004 103
Section 10. June 20, 2004 to June 19, 2005 102
Section 11. June 20, 2005 to June 19, 2006 101
Section 12. June 20, 2006 and thereafter 100
</TABLE>
(a) In order to exercise a right to require the Corporation to
redeem a holder's Series 1996A Stock, the holder must deliver a request for
redemption, accompanied by the certificates representing the shares to be
redeemed, to the Corporation at any time prior to the Mandatory Conversion Date.
If a request for redemption is given with regard to shares of Series 1996A
Stock, promptly (but in no event more than five Business Days) after the request
for redemption is given to the Corporation, the Corporation will pay the holder
cash equal to the Redemption Price of the shares. The date of such payment is
referred to herein as the "Redemption Date."
(b) (i) If a request for redemption accompanied by the
certificates representing the shares to be redeemed is delivered to the
Corporation, on the Redemption Date dividends will cease to accrue with regard
to the shares of Series 1996A Stock to be redeemed, and at the close of business
on that date the holders of those shares will cease to be stockholders with
respect to those shares, will have no interest in or claims against the
Corporation by virtue of the shares and will have no voting or other rights with
respect to the shares.
(i) The dividend with respect to a share of Series
1996A Stock which is the subject of a request for redemption delivered on a day
which falls between the close of business on a dividend payment Record Date and
the opening of business on the corresponding Dividend Payment Date will be
payable on the Dividend Payment Date to the holder of record of
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<PAGE> 23
the share of Series 1996A Stock on the dividend payment Record Date
notwithstanding the redemption of the share of Series 1996A Stock after the
dividend payment Record Date and prior to the Dividend Payment Date.
(c) At such time as there ceases to be in excess of 40,000
shares of Series 1996A Stock outstanding, the Corporation may at its option
purchase all of the outstanding shares of the Series 1996A Stock from the
holders thereof at a price equal to the greater of (a) 110% of the sum of the
Stated Value of such shares together with all Accrued Dividends thereon and (b)
the fair market value of such shares, which shall be equal to the fair market
value of the Common Stock, as of such date, issuable upon conversion of such
shares, together with all Accrued Dividends thereon.
Section 8. Ranking. Subject to Section 3(b), the shares of Series 1996A
Preferred Stock will, with respect to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding-up of the
Corporation, rank prior to any other class or series of preferred stock or
Common Stock issued by the Corporation.
Section 9. Miscellaneous.
(a) Except as otherwise expressly provided in these Articles
Supplementary, whenever a notice or other communication is required or permitted
to be given to holders of shares of Series 1996A Stock, the notice or other
communication will be deemed properly given if deposited in the United States
mail, postage prepaid, addressed to the persons shown on the books of the
Corporation as the holders of the shares at the addresses as they appear in the
books of the Corporation, as of the record date or dates determined in
accordance with applicable law and with the Charter and Bylaws, as in effect
from time to time.
(b) Shares of Series 1996A Stock will not have any
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications or terms and conditions of redemption, other than those
specifically set forth herein, in the Charter, and as may be provided under
applicable law insofar as any such provision does not conflict with the terms
hereof.
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<PAGE> 24
(c) The headings of the various subdivisions herein are for
convenience only and will not affect the meaning or interpretation of any of the
provisions herein.
(d) Provided that the Corporation's Board of Directors
determines that it is appropriate to submit to a vote of the holders of Series
1996A Stock, the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other distributions,
qualifications and terms and conditions of redemption of the Series 1996A Stock
may be waived, and any of such provisions of the Series 1996A Stock may be
amended, by the approval of holders of at least 66-2/3% of the outstanding
shares of Series 1996A Stock, voting separately as a class.
(e) Notwithstanding anything to the contrary contained in
Section 3, Section 5 or Section 7 hereof, each holder of Series 1996A Stock
hereby agrees that, in determining whether any holder of Series 1996A Stock has
(i) voted to elect any director of the Corporation under Section 3(a), (ii)
approved any action of the Corporation under Sections 3(b) or 3(c), (iii)
elected to cause the conversion of holder's Series 1996A Stock into Common Stock
or other securities or assets under Section 5, (iv) received any notice of the
Corporation required by these Articles Supplementary, including without
limitation notices required by Section (5)(e)(ix) and Section 5(f), or (v)
elected to cause the redemption by the Corporation of such holder's Series 1996A
Stock in the circumstances provided in Section 7, Tiger/Westbrook Real Estate
Fund, L.P., and Tiger/Westbrook Real Estate Co-Investment Partnership, L.P.,
each a Delaware limited partnership (together with their respective successors,
collectively the "Fund"), shall jointly but not severally have the right to
grant or deny any such approvals, make or decline any such elections or receive
any such notices with regard to all of the Series 1996A Stock held of record by
each such holder and a notice received by the Fund and a document executed by
the Fund causing the election of any director under Section 3(a), granting or
denying approval to any action by the Corporation under Section 3(c), or
electing or declining to the Corporation to effect the redemption of Series
1996A Stock in the circumstances provided in Section 7 shall determine the
matter for all holders. Upon written notice by the Fund to the Company, the Fund
may, or
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<PAGE> 25
upon the effectiveness of a registration statement filed with the Securities and
Exchange Commission registering the sale of Series 1996A Stock pursuant to which
all Series 1996A Stock has been disposed of, the Fund shall relinquish such
powers over any or all of the shares of Series 1996A Stock. The foregoing
provisions shall be implemented by execution by each holder of Series 1996A
Stock of a proxy in favor of WBP I Holding Corp. and WBP II Holding Corp. acting
as nominees for the Fund.
Section 10. Permissible Distributions.
In determining whether a distribution (other than upon
voluntary or involuntary liquidation), by dividend, redemption or other
acquisition of shares or otherwise, is permitted under the Maryland General
Corporation Law, amounts that would be needed, if the Corporation were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of holders of Series 1996A Stock whose preferential rights upon
dissolution are superior to those receiving the distribution shall not be added
to the Corporation's total liabilities.
Section 11. Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted
in a manner as to be effective and valid under applicable law, but if any
provision hereof is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should determine that a
provision hereof would be valid or enforceable if a period of time were extended
or shortened or a particular percentage were increased or decreased, then such
court may make such change as shall be necessary to render the provision in
question effective and valid under applicable law.
SECOND: The Series 1996A Stock has been reclassified by the Board of
Directors under a power contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board of
Directors in the manner and by the vote required by law.
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<PAGE> 26
FOURTH: The undersigned acknowledges these Articles Supplementary to be
the act of the Corporation and states as to all matters and facts required to be
verified under the oath that, to the best of his knowledge, information and
belief, these matters and facts are true in all material respects and such
statement is made under penalties for perjury.
26
<PAGE> 27
IN WITNESS WHEREOF, these Articles Supplementary are executed on behalf
of the Corporation by its President and attested by its Secretary this 1st day
of July, 1996.
ESSEX PROPERTY TRUST, INC.
By: /s/ Keith Guericke
--------------------------------
Name: Keith Guericke
------------------------
Title: President
-----------------------
[SEAL]
Attest:
/s/ Michael Schall
- -----------------------------
Name: Michael Schall
------------------------
Title: Secretary
27
<PAGE> 28
Exhibit A
to Essex Property Trust, Inc. Articles Supplementary
ESSEX PROPERTY TRUST - SERIES 1996A PREFERRED STOCK
ANTI-DILUTION CONVERSION PRICE
ADJUSTMENT FORMULA PURSUANT TO SECTIONS 5(e)(ii)
AND 5(e)(v) ("ADJUSTMENT FORMULA")
OBJECTIVE: To keep the Series 1996A Preferred Stock holders' relative
ownership percentage of shares constant (as compared to a
transaction consummated at the Conversion Price), upon the
issuance of a "New Dilutive Security" (see definition below), the
then-applicable Conversion Price of the Series 1996A Preferred
Stock will be adjusted as follows:
PRIOR ANTI-DILUTION ADJUSTED
CONVERSION PRICE ADJUSTMENT FORMULA CONVERSION PRICE
---------------- ------------------ ----------------
X x (A + B + C ) + EX = X-
------------------
(A + B + C-) + EX-
\__ Must Be Solved for Per Calculation
Included in Example Below
----------------------------------
DEFINITIONS:
-----------
X - Conversion Price of Series 1996A Preferred Stock prior to issuance
of "New Dilutive Security."
"New Dilutive Security" - A common stock or common stock equivalent
issuance at a price below X.
X- - Conversion Price of Series 1996A Preferred Stock adjusted for
issuance of "New Dilutive Security."
A - The number of common stock equivalent shares outstanding which
includes: (i) Common Stock issued and outstanding, (ii) all
Dilutive (defined below) convertible securities outstanding,
excluding Operating Partnership Units and the Series 1996A Stock
and (iii) all Dilutive options issued and outstanding on an
as-exercised basis (excluding stock options covering 715,400 shares
of Common Stock) prior to issuance of "New Dilutive Security." For
purposes of this definition, a security described under (ii) or
(iii) will be considered "Dilutive" in all subsequent applications
of the Adjustment Formula if it triggers the Adjustment Formula
upon issuance. Moreover, a security described under (ii) will be
considered "Dilutive" if at issuance the security is issued at a
premium of 10% or less to the current Market Price of the Common
Stock and a security described under (iii) will be considered
"Dilutive" if at the time of a calculation under the Adjustment
Formula the Common Stock equivalent price of the security reflects
a premium of 10% or less to the Current Market Price of the common
stock. The Current Market Price is defined herein.
B - Shares of Common Stock issuable upon conversion of all
convertible Operating Partnership Units outstanding prior to
issuance of "New Dilutive Security."
C - Shares of Common Stock issuable upon conversion of all
outstanding Series 1996A Stock, assuming the prior Conversion
Price, (or X).
C- - Shares of Common Stock issuable upon conversion of all
outstanding Series 1996A Preferred Stock, assuming the adjusted
Conversion Price for the New Dilutive Security issuance (or X-).
EX - "New Dilutive Security" equivalent common shares, assuming the
prior Conversion Price, or X
EX- - "New Dilutive Security" equivalent common shares, based
on actual conversion of security
For purposes of any calculation pursuant to this Exhibit A, common stock
equivalent shares will be deemed to include the shares of Series 1996A Stock
purchased pursuant to the certain Stock Purchase Agreement between the
Corporation and the Buyer (as defined therein), dated June 20, 1996, as
amended. Any calculation performed prior to the final purchase of shares of
Series 1996A Stock pursuant to such Stock Purchase Agreement will be
recalculated giving effect to all shares of Series 1996A Stock sold under such
agreement as if such shares had been issued and outstanding at all times for
purposes of the Adjustment Formula.
<PAGE> 29
SCHEDULE A (CONTINUED)
EXAMPLE:
- -------
- - Assume a 2.5 million share common stock issuance at $20/share (the "New
Dilutive Security") following an investment of $40 million in Series 1996A
Stock at a $21.875 Conversion Price:
SOLUTION:
- - Prior to solving for C-, the following table must be created:
<TABLE>
<CAPTION>
POST-NEW DILUTIVE POST-NEW
DILUTIVE
SECURITY ISSUANCE AS SECURITY
ISSUANCE AS
PRE-NEW DILUTIVE ISSUED AT $20 PER SHARE IF
ISSUED AT
SECURITY ISSUANCE AND UNADJUSTED $21.875
PER SHARE
---------------- -----------------------
- --------------------
# OF SHARES PERCENTAGE # OF SHARES PERCENTAGE # OF SHARES
%
----------- ---------- ----------- ---------- -----------
- -
<S> <C> <C> <C> <C> <C>
<C>
SHARE CAPITALIZATION OF COMPANY
Common Stock Equivalent Shares (A) 6,275,000 63.0% 6,275,000 50.4% 6,275,000
51.2%
Convertible OP Units Outstanding (B) 1,855,000 18.6% 1,855,000 14.9% 1,855,000
15.1%
1996A Equivalent Common Stock (C) 1,828,571 18.4% 1,828,571 14.7% 1,828,571
14.9%
New Dilutive Security Shares (EX-/EX) 0 0.0% 2,500,000 20.1% 2,285,714
18.7%
--------- ----- --------- ----- ---------
-----
TOTAL 9,958,571 100.0% 12,458,571 100.0% 12,244,285
100.0%
</TABLE>
- - C- is the number of shares of Common Stock into which the outstanding shares
of Series 1996A Stock must convert in order to maintain the Series 1996A
Preferred Stock holders' ownership percentage at 14.9% (i.e., as if the
issuance were done at the Conversion Price prior to the issuance (or X))
given the New Dilutive Security issuance at $20 per common share. To solve
for C-, the following calculations must be made:
<TABLE>
<CAPTION>
# OF COMMON
EQUIVALENT SHARES
-----------------
<S> <C>
Share Capitalization, post New Dilutive
Security Issuance as issued at $20 per
share and unadjusted 12,458,571
- - (C) (1,828,571)
----------
= Share Capitalization less 1996A equivalent
Common Stock 10,630,000
/(100%-14.9%) or 100% less ownership holders 85.1%
of Series 1996A Preferred Stock are to maintain
= Total Share Capitalization Required for holders
of Series 1996A Preferred Stock to maintain
ownership percentage at 14.9% 12,495,592
x Required Buyer ownership percentage
pursuant to above 14.9%
= C- 1,865,592
</TABLE>
<PAGE> 30
SCHEDULE A (CONTINUED)
Given C-, one solves for X- as follows:
<TABLE>
<CAPTION>
Prior Adjusted
Conversion Adjustment Formula Conversion
Price or X Price or X-
<S> <C> <C>
$21.875 x (6,275,000+1,855,000+1,828,571)+($50,000,000/$21.875) X-
-----------------------------------------------------
(6,275,000+1,855,000+1,865,592)+($50,000,000/$20) =
$21.875 x 98.0% = X-
$21.44 = X-
</TABLE>
<TABLE>
<CAPTION>
Proof of Calculation: POST-NEW DILUTIVE SECURITY
ISSUANCE AS ISSUED AT
$20 PER SHARE AND
AS ADJUSTED
-------------------------
# OF SHARES %
----------- -----
<S> <C> <C>
SHARE CAPITALIZATION OF COMPANY
Common Stock Equivalent Shares (A) 6,275,000 50.2%
Convertible OP Units Outstanding (B) 1,855,000 14.8%
1996A Equivalent Common Stock (C-/C) 1,865,592 14.9%
New Dilutive Security Shares (EX-/EX) 2,500,000 20.0%
---------- ------
TOTAL 12,495,592 100.0%
</TABLE>
<PAGE> 1
STOCK PURCHASE AGREEMENT
by and between
TIGER/WESTBROOK REAL ESTATE FUND, L.P.
and
TIGER/WESTBROOK REAL ESTATE CO-INVESTMENT PARTNERSHIP, L.P.,
and
ESSEX PROPERTY TRUST, INC., a Maryland corporation
dated as of
June 20, 1996
<PAGE> 2
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of June 20,
1996, is made by and between Essex Property Trust, Inc., a Maryland corporation
(the "Company") and Tiger/Westbrook Real Estate Fund, L.P., a Delaware limited
partnership, and Tiger/Westbrook Real Estate Co-Investment Partnership, L.P., a
Delaware limited partnership (individually and collectively, "Buyer").
RECITALS:
WHEREAS, Buyer wishes to purchase from the Company, and the Company
wishes to issue and sell to Buyer, an aggregate of 280,000 shares of a newly
authorized series of preferred stock of the Company designated as 8.75%
Convertible Preferred Stock, Series 1996A (the "Preferred Stock"), having the
terms set forth in the form of Company's Articles Supplementary attached as
Exhibit A (the "Articles Supplementary") establishing the rights, privileges and
preferences of the Preferred Stock, at a price of $25.00 per share;
WHEREAS, an affiliate of Buyer and the Company have entered into that
certain Loan Facility Agreement (the "Loan Agreement") as of even date herewith
whereby T/W Essex Funding, L.L.C. ("Lender") has agreed to lend to the Company
and the Company has agreed to borrow from the Lender up to an aggregate of
$33,000,000 which borrowed funds shall under the circumstances set forth in the
Loan Agreement be exchangeable for additional shares of Preferred Stock or, if
the Company and Buyer so agree, Operating Partnership Units, subject to the
terms and conditions set forth herein and therein; and
WHEREAS, Buyer and the Company are entering into this Agreement to
provide for such purchase and sale of the Preferred Stock and to establish
various rights and obligations in connection therewith.
AGREEMENT:
ARTICLE 1
Definitions
As used in this Agreement, the following terms shall have the following
respective meanings: Capitalized terms used herein but not defined herein shall
have the meanings set forth in the Loan Agreement.
Section 1.1 "Action" shall mean any suit, arbitration, inquiry,
proceeding or injunction by or before any Government Authority, court or
arbitrator.
Section 1.2 "Additional Purchase Price" shall mean the consideration
payable by Buyer to the Company for the shares of Preferred Stock acquired by
Buyer at any Initial Exchange Closing or any Subsequent Closing, consisting of
an exchange of principal amount of the Loan, cash, or a combination thereof, as
the case may be.
1
<PAGE> 3
Section 1.3 "Affiliate" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the Exchange Act, and as in effect on the date
hereof.
Section 1.4 "Agreement" shall have the meaning set forth in the first
paragraph hereof.
Section 1.5 "Annual Report" shall have the meaning set forth in
Section 3.1(e).
Section 1.6 "Articles Supplementary" shall have the meaning set forth
in the second paragraph hereof.
Section 1.7 "Benefit Arrangements" shall have the meaning set forth in
Section 3.15 (b).
Section 1.8 "Blue Sky Laws" shall have the meaning set forth in
Section 3.4(e).
Section 1.9 "Buyer" shall have the meaning set forth in the first
paragraph hereof.
Section 1.10 "CERCLA" shall have the meaning set forth in Section
3.14(b).
Section 1.11 "Charter Amendment" shall mean an amendment to the
Company Charter mutually satisfactory to the Company and Buyer which provides
that the Company may issue to the Buyer the Preferred Stock under the terms and
conditions set forth herein.
Section 1.12 "Closing Agreement" shall mean a written and legally
binding agreement with a taxing authority relating to Taxes.
Section 1.13 "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, including all of the rules and regulations
promulgated thereunder.
Section 1.14 "Common Stock" shall mean the common stock, par value
$.0001 per share, of the Company.
Section 1.15 "Company" shall have the meaning set forth in the first
paragraph hereof.
Section 1.16 "Company Charter" shall mean the Articles of Amendment
and Restatement of the Company, as in effect on the date hereof.
Section 1.17 "Company Leases" shall mean all ground leases residential
or shopping center leases relating to the Company Properties.
Section 1.18 "Company Plan" shall have the meaning set forth in
Section 3.15(a).
Section 1.19 "Company Properties" shall mean all real property owned
or leased by the Company or any of its Subsidiaries (collectively, and together
with all buildings, structures and other improvements and fixtures located on or
under such land and all easements, rights and other appurtenances to such land).
2
<PAGE> 4
Section 1.20 "Company Registration Statement" shall have the meaning
set forth in Section 3.5(a).
Section 1.21 "Company Reports" shall have the meaning set forth in
Section 3.5(a).
Section 1.22 "Debt Instruments" shall mean all notes, mortgages, deeds
of trust or similar instruments which evidence or secure any indebtedness.
Section 1.23 "Election" shall have the meaning set forth in Section
3.10(b).
Section 1.24 "Employee Benefit Plans" shall have the meaning set forth
in Section 3.15(b).
Section 1.25 "Employees" shall have the meaning set forth in Section
3.15(b).
Section 1.26 "Environment" shall have the meaning set forth in Section
3.14(b).
Section 1.27 "Environmental Laws" shall have the meaning set forth in
Section 3.14(b).
Section 1.28 "EPA" shall have the meaning set forth in Section
3.14(a).
Section 1.29 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.30 "ERISA Affiliates" shall mean, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 1.31 "Exchange Act" shall have the meaning set forth in
Section 3.4(e).
Section 1.32 "GAAP" shall have the meaning set forth in Section
3.5(b).
Section 1.33 "Government Authority" shall mean any government or state
(or any subdivision thereof) of or in the United States, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal thereof.
Section 1.34 "Hazardous Substance" shall have the meaning set forth in
Section 3.14(b).
Section 1.35 "HSR Act" shall have the meaning set forth in Section
3.4(e).
Section 1.36 "Indemnified Party" shall mean Buyer or the Company, as
the context may require.
3
<PAGE> 5
Section 1.37 "Initial Closing" shall mean the consummation of the
purchase and sale of shares of Preferred Stock pursuant to Section 2.1.
Section 1.38 "Initial Closing Date" shall have the meaning set forth
in Section 2.1.
Section 1.39 "Initial Exchange Closing" shall mean any of the closings
with respect to the issuance of Preferred Stock contemplated by Section 2.10 of
the Loan Agreement.
Section 1.40 "Initial Purchase Price" shall have the meaning set forth
in Section 2.1.
Section 1.41 "IRS" shall mean the Internal Revenue Service.
Section 1.42 "Leases" shall have the meaning set forth in Section
3.15(h).
Section 1.43 "Liabilities" shall mean, as to any person, all debts,
adverse claims, liabilities and obligations, direct, indirect, absolute or
contingent of such person, whether accrued, vested or otherwise, whether in
contract, tort, strict liability or otherwise and whether or not actually
reflected, or required by GAAP to be reflected, in such person's or entity's
balance sheets or other books and records, including (i) obligations arising
from non-compliance with any law, rule or regulation of any Government Authority
or imposed by any court or any arbitrator of any kind, (ii) all indebtedness or
liability of such person for borrowed money, or for the purchase price of
property or services (including trade obligations), (iii) all obligations of
such person as lessee under leases, capital or other, (iv) liabilities of such
person in respect of plans covered by Title IV of ERISA, or otherwise arising in
respect of plans for employees or former employees or their respective families
or beneficiaries, (v) reimbursement obligations of such person in respect of
letters of credit, (vi) all obligations of such person arising under acceptance
facilities, (vii) all liabilities of other persons or entities, directly or
indirectly, guaranteed, endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse by such person or with
respect to which the person in question is otherwise directly or indirectly
liable, (viii) all obligations secured by any Lien on property of such person,
whether or not the obligations have been assumed, and (ix) all other items which
have been, or in accordance with GAAP would be, included in determining total
liabilities on the liability side of the balance sheet.
Section 1.44 "Liens" shall mean all liens, mortgages, deeds of trust,
deeds to secure debt, security interests, pledges, claims, charges, easements
and other encumbrances of any nature whatsoever.
Section 1.45 "Loan" shall have the meaning set forth in the Loan
Agreement.
Section 1.46 "Loan Agreement" shall have the meaning set forth in
Section 2.1.
Section 1.47 "Material Adverse Effect" shall mean a material adverse
effect on the financial condition, results of operations or business of the
Company and its Subsidiaries (to the extent of the Company's interests therein)
taken as a whole.
4
<PAGE> 6
Section 1.48 "NYSE Advice" shall mean such advice as may be requested
by, and reasonably acceptable to, Buyer and/or the Company regarding the
Company's compliance with New York Stock Exchange listing requirements regarding
the issuance of Preferred Stock in accordance with the transactions contemplated
hereby.
Section 1.49 "OP Subscription Agreement" shall mean an agreement
mutually satisfactory to the Company and Buyer pertaining to Buyer's possible
purchase of preferred Operating Partnership Units and reflecting the terms and
conditions of an amendment to the Partnership Agreement mutually satisfactory to
the Company and Buyer in accordance with Section 7.2.
Section 1.50 "Operating Partnership" shall mean Essex Portfolio, L.P.,
a California limited partnership, or any successor thereto.
Section 1.51 "Other Filings" shall have the meaning set forth in
Section 5.1(b).
Section 1.52 "Partnership Agreement" shall mean that certain Agreement
of Limited Partnership of the Operating Partnership, dated as of March 15, 1994
as amended on April 15, 1994.
Section 1.53 "Pension Plans" shall have the meaning set forth in
Section 3.15(b).
Section 1.54 "Permitted Liens" shall mean (i) Liens (other than Liens
imposed under ERISA or any Environmental Law or in connection with any
Environmental Claim) for taxes or other assessments or charges of Governmental
Authorities that are not yet delinquent or that are being contested in good
faith by appropriate proceedings, in each case, with respect to which adequate
reserves or other appropriate provisions are being maintained by the Company or
its Subsidiaries to the extent required by GAAP, (ii) statutory Liens of
landlords, carriers, warehousemen, mechanics, materialmen and other Liens (other
than Liens imposed under ERISA or any Environmental Law or in connection with
any Environmental Claim) imposed by law and created in the ordinary course of
business for amounts not yet overdue or which are being contested in good faith
by appropriate proceedings, in each case, with respect to which adequate
reserves or other appropriate provisions are being maintained by the Company or
its Subsidiaries to the extent required by GAAP and which do not exceed $750,000
in the aggregate, (iii) the Company Leases, (iv) easements, rights-of-way,
covenants and restrictions which are customary and typical for commercial or
residential properties similar to the commercial and residential Company
Properties, as the case may be, and which do not (x) interfere materially with
the ordinary conduct of any Company Property or the business of the Company and
its Subsidiaries as a whole or (y) detract materially from the value or
usefulness of the Company Property to which they apply, (v) the other Liens
relating to the Company's Camarillo property and (vi) such imperfections of
title and encumbrances, if any, as would not, individually, or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
Section 1.55 "Per Unit Purchase Price" shall have the meaning set
forth in Section 2.3.
5
<PAGE> 7
Section 1.56 "Per Share Purchase Price" shall mean the price of $25.00
per share for the Preferred Stock.
Section 1.57 "person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.58 "Preferred Stock" shall have the meaning set forth in the
second paragraph hereof.
Section 1.59 "Proxy Statement" shall have the meaning set forth in
Section 5.1(b).
Section 1.60 "Registration Rights Agreement" shall have the meaning
set forth in Section 2.2(a).
Section 1.61 "Regulatory Filings" shall have the meaning set forth in
Section 3.4(e).
Section 1.62 "REIT" shall have the meaning set forth in Section
3.10(b).
Section 1.63 "Release" shall have the meaning set forth in Section
3.14(c).
Section 1.64 "REOC" shall have the meaning set forth in Section
3.15(h).
Section 1.65 "REOC Qualification Date" shall have the meaning set
forth in Section 3.14(d).
Section 1.66 "SEC" shall have the meaning set forth in Section 3.5(a).
Section 1.67 "Securities Act" shall mean the Securities Act of 1933,
as amended.
Section 1.68 "Securities Laws" shall have the meaning set forth in
Section 3.5(a).
Section 1.69 "Stockholders Agreement" shall have the meaning set forth
in Section 2.2(a).
Section 1.70 "Subsidiaries" shall mean, collectively, the Operating
Partnership and any other company of which the Company is the direct or indirect
general partner or as to which the Company has the right or power, direct or
indirectly, to elect a majority of the board of directors or other persons
performing similar functions or as to which the Company, directly or indirectly,
has a majority economic ownership interest.
Section 1.71 "Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether
6
<PAGE> 8
disputed or not. The term "Tax" also includes any amounts payable pursuant to
any tax sharing agreement to which any relevant entity is liable as a successor
or pursuant to contract.
Section 1.72 "Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Section 1.73 "Tax Ruling" shall mean a written ruling of a taxing
authority relating to Taxes.
Section 1.74 "Welfare Plans" shall have the meaning set forth in
Section 3.15(b).
ARTICLE 2
Purchase and Sale of Securities; Closings
Section 2.1 "Initial Closing." Subject to the terms and conditions
hereof, on the Initial Closing Date, the Company will sell, convey, assign,
transfer and deliver, and Buyer will purchase and acquire from the Company,
280,000 shares of Preferred Stock at a price of $25.00 per share for an
aggregate purchase price in immediately available funds of $7,000,000 (the
"Initial Purchase Price"). The Initial Closing shall take place at the offices
of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California, at 10:00
a.m. on such date as the parties hereto may mutually agree (the "Initial Closing
Date").
Section 2.2 "Initial Closing Deliveries."
(a) At the Initial Closing, and as a condition to the
parties' obligations hereunder to effect the transactions contemplated hereby at
the Initial Closing, the Company and Buyer shall enter into a registration
rights agreement substantially in the form attached as Exhibit C (the
"Registration Rights Agreement"), the Company, Buyer and Messrs. Marcus and
Guericke each shall enter into a stockholders agreement substantially in the
form attached as Exhibit D (the "Stockholders Agreement").
(b) In addition to the other things required to be
done hereby including the delivery of the Diligence Fee, at the Initial Closing,
the Company shall deliver, or cause to be delivered, to Buyer the following: (i)
certificates representing the number of shares of Preferred Stock to be issued
and delivered at the Initial Closing, free and clear of all Liens (unless
created by Buyer or any of its Affiliates) with all necessary stock transfer and
other documentary stamps attached, (ii) a certificate, dated the Initial Closing
Date and validly executed by an appropriate officer of the Company, as
contemplated by Section 7.1(a), (iii) evidence or copies of any consents,
approvals, orders, qualifications or waivers required pursuant to Section 7.1,
(iv) all certificates and other instruments and documents required by this
Agreement to be delivered by the Company to Buyer at or prior to the Initial
Closing, and (v) such other instruments reasonably requested by Buyer, as may be
necessary or appropriate to confirm or carry out the provisions of this
Agreement.
7
<PAGE> 9
(c) In addition to the delivery of the Initial
Purchase Price and the other things required to be done hereby, at the Initial
Closing, Buyer shall deliver, or cause to be delivered, to the Company the
following: (i) a certificate, dated the Initial Closing Date and validly
executed by Buyer, as contemplated by Section 7.3(a), (ii) if not previously
delivered to the Company, all other certificates, documents, instruments and
writings required pursuant hereto to be delivered by or on behalf of Buyer at or
before the Initial Closing, and (iii) such other instruments reasonably
requested by the Company, as may be necessary or appropriate to confirm or carry
out the provisions of this Agreement.
Section 2.3 "Initial Exchange Closings and Subsequent Closings."
(I) "Initial Exchange Closings"
(a) Option A. If Option A is applicable, effective as
of the Option A Maturity Date, (i) Buyer shall, or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the antidilution and "Organic Change"
provisions of the Loan Agreement).
(b) Option B. If Option B is applicable, effective as
of the Option B Maturity Date, (i) Buyer shall, or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the anti-dilution and "Organic Change"
provisions of the Loan Agreement).
(c) Option C. If Option C is applicable, effective as
of the Option C Maturity Date, Buyer shall, or cause the Lender to, exchange up
to $1,500,000 principal amount of the Loan for 60,000 shares of Preferred Stock
to be issued by the Company at an Additional Purchase Price of $25.00 per share
(subject to the antidilution and "Organic Change" provisions of the Loan
Agreement).
(d) Option D. If Option D is applicable, effective as
of the Option D Maturity Date, Buyer (i) shall or cause the Lender to, exchange
$13,000,000 principal amount of the Loan for 520,000 shares of Preferred Stock
to be issued by the Company (subject to the antidilution and "Organic Change"
provisions of the Loan Agreement) and (ii) shall have the option to acquire up
to an additional 240,000 shares of Preferred Stock to be issued by the Company
at a per share Additional Purchase Price of $25.00 (subject to the antidilution
and "Organic Change" provisions of the Loan Agreement).
(II) "Subsequent Closings." If Option A or B is applicable, Buyer
shall purchase from the Company an additional 800,000 shares of Preferred Stock
at an Additional Purchase Price of $25.00 per share prior to June 20, 1997
(subject to the antidilution and "Organic Change" provisions of the Loan
Agreement), pursuant to no more than three Subsequent Closings each involving
the purchase of not less than 200,000 shares of Preferred Stock.
(III) "Place of Closing." The consummation of each Subsequent Closing
shall take place at the Palo Alto offices of Morrison & Foerster LLP at 10:00
a.m. on the Subsequent Closing Date or such other place as agreed upon by the
parties.
8
<PAGE> 10
Section 2.4 "Initial Exchange Closing and Subsequent Closing
Deliveries."
(a) At each Initial Exchange Closing and Subsequent
Closing, the Company shall deliver or cause to be delivered, to Buyer the
following (i) such documentation as may be reasonably required to be delivered
by the Company pursuant to the terms of the Loan Agreement, (ii) certificates
representing the number of shares of Preferred Stock free and clear of all Liens
(unless created by Buyer or any of its Affiliates) with all necessary stock
transfer and other documentary stamps attached, (iii) a certificate dated such
Subsequent Closing Date and validly executed by an appropriate officer of the
Company, as contemplated by Section 7.2(a), (iv) as to Subsequent Closings,
evidence or copies of any consents, approvals, orders, qualifications or waivers
required pursuant to Section 7.2, (v) all certificates and other instruments and
documents required by this Agreement or the Loan Agreement to be delivered by
the Company to Buyer at or prior to each Subsequent Closing, and (vi) such other
instruments reasonably requested by Buyer as may be necessary or appropriate to
confirm or carry out the provisions of this Agreement.
(b) Buyer shall deliver to the Company, by wire
transfer of immediately available funds in U.S. dollars to an account designated
by the Company, the amount of the Additional Purchase Price in excess of the
principal amount of the Loan exchanged therefore together with all interest or
fees due to the Lender under the Loan Agreement, if any. In addition to the
delivery of the Additional Purchase Price and the other things required to be
done hereby, at the Initial Exchange Closing and each Subsequent Closing, Buyer
shall deliver, or cause to be delivered, to the Company the following: (i) at
each Subsequent Closing a certificate, dated such Subsequent Closing Date and
validly executed by Buyer, as contemplated by Section 7.3(a), (ii) at the
Initial Exchange Closing and each Subsequent Closing, if not previously
delivered to the Company, all other certificates, documents, instruments and
writings required pursuant hereto to be delivered by or on behalf of Buyer at or
before each such closing, and (iii) such other instruments reasonably requested
by the Company, as may be necessary or appropriate to confirm or carry out the
provisions of this Agreement.
Section 2.5 "Operating Partnership Units." Notwithstanding the
foregoing, provided that the Company and Buyer shall have previously entered
into the OP Subscription Agreement, Buyer may purchase such number of Operating
Partnership Units in lieu of any shares of Preferred Stock on any Subsequent
Closing Date on economically equivalent terms. At any Subsequent Closing at
which Operating Partnership Units are to be purchased, Buyer shall deliver to
the Company the Purchase Price for such Operating Partnership Units upon such
terms and together with such other documentation set forth in Section 2.4(b) and
the Company shall deliver to Buyer an amended and restated Partnership Agreement
(in form and substance satisfactory to both Company and Buyer) and any other
appropriate documents evidencing the Operating Partnership Units, such Operating
Partnership Units to be free and clear of all Liens (unless created by Buyer or
any of its Affiliates) together with such other appropriate documentation set
forth in Section 2.4(a).
Section 2.6 "Exchange of Preferred Stock for Units; Units for
Preferred Stock." Provided that the Company and Buyer shall have previously
entered into the OP Subscription Agreement, at any time and from time to time
after the later of the Stockholder Approval Date and
9
<PAGE> 11
the date on which the Partnership Agreement shall have been amended in
accordance with Section 7.2:
(a) Buyer shall have the right to exchange its shares
of Preferred Stock into such number of Operating Partnership Units as is equal
to the product of (i) the number of shares of Preferred Stock held by Buyer
multiplied by (ii) the quotient of (x) the Per Share Purchase Price divided by
(y) the Per Unit Purchase Price then in effect. Any accrued and unpaid dividends
on Buyer's Preferred Stock may be exchanged into such number of Operating
Partnership Units achieved by dividing the aggregate amount of such dividend
accrued on the Preferred Stock by the Per Unit Purchase Price then in effect;
(b) Buyer shall have the right to exchange its
Operating Partnership Units into such number of shares of Preferred Stock as is
equal to the product of (i) the number of Operating Partnership Units then held
by Buyer multiplied by (ii) the quotient of (x) the Per Unit Purchase Price then
in effect divided by (y) the Per Share Purchase Price.
ARTICLE 3
Representations and Warranties of the Company
The Company hereby represents and warrants to Buyer as follows:
Section 3.1 "Organization and Qualification; Subsidiaries."
(a) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Maryland.
The Company has all requisite corporate power and authority to enter into this
Agreement, the Registration Rights Agreement, the Stockholders Agreement, the
Loan Agreement and the Promissory Note and to perform its obligations hereunder
and thereunder. The Company has all requisite governmental licenses,
authorizations, consents and approvals to own, operate, lease and encumber its
properties and carry on its business as now conducted, except where the failure
to so have could not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(b) The Operating Partnership is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of California. The Operating Partnership has all requisite
partnership power and authority to enter into the Guarantee. The Operating
partnership has all requisite governmental licenses, authorizations, consents
and approvals to own, operate, lease and encumber its properties and carry on
its business as now conducted, except where the failure to do so could not have,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(c) Each of the Subsidiaries of the Company is a
corporation, partnership or limited liability company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, and has the corporate or partnership power and
authority to own its properties and carry on its business as it is now being
conducted. Each of the Subsidiaries has all requisite governmental licenses,
authorizations, consents and
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approvals , except where the failure to could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
(d) Each of the Company and its Subsidiaries is duly
qualified to do business and in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires such
qualification, except for any failures to be so qualified or to be in good
standing as would not, individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
(e) The Company's Annual Report on Form 10-K, as
amended, for the year ended December 31, 1995 (as amended, together with all
information incorporated by reference therein, the "Annual Report") sets forth
all information regarding the Company's Subsidiaries required to be stated
therein. All of the outstanding shares of capital stock of, or other equity
interest in, each of the Subsidiaries owned by the Company or the Operating
Partnership are duly authorized, validly issued, fully paid and nonassessable,
and are owned, directly or indirectly, by the Company free and clear of all
Liens. Except as described in the Company Reports, there are no existing
options, warrants, calls, subscriptions, convertible securities or other rights,
agreements or commitments which obligate the Company or any of the Subsidiaries
to issue, transfer or sell any shares of capital stock or equity interests in
any of the Subsidiaries.
(f) The financial statements to the Annual Report set
forth a description of all allocations among the Company and any Subsidiary of
the material expenses incurred by the Company and its Subsidiaries, taken as a
whole as are required to be stated therein.
Section 3.2 "Authority Relative to Agreements; Board Approval."
(a) The execution, delivery and performance by the
Company of this Agreement, the Registration Rights Agreement, the Stockholders
Agreement, the Articles Supplementary, the Loan Agreement and the Promissory
Note and the issuance and delivery of shares of Common Stock upon conversion of
shares of Preferred Stock in accordance with the provisions of the Articles
Supplementary and Bylaws of the Company, have been duly and validly authorized
(or by the Initial Closing Date will have been authorized) by all necessary
corporate action on the part of the Company. Each of this Agreement, the
Registration Rights Agreement, the Stockholders Agreement, the Loan Agreement
and the Promissory Note has been duly executed and delivered by the Company and
constitutes the valid and legally binding obligations of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity, subject to the approval of
the Board of Directors to recommend to the stockholders that they approve the
issue to Buyer of the Preferred Stock under the terms and conditions set forth
herein, including approval of amendments to the Charter and Bylaws of the
Company and the recommendation of any action to be taken by the stockholders.
Upon issuance of any shares of Preferred Stock, the Articles Supplementary will
constitute a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights or general principles of equity.
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(b) The Executive Committee has determined to
recommend to the Board of Directors of the Company that it recommend that the
stockholders of the Company vote in favor of and approve the issuance to Buyer
of Preferred Stock under the terms and conditions set forth herein.
(c) The shares of Preferred Stock to be acquired
pursuant to this Agreement have been duly authorized for issuance, and upon
issuance and delivery by the Company in accordance with this Agreement will be
duly and validly issued, fully paid and nonassessable. The shares of Common
Stock issuable upon conversion of the Preferred Stock to be acquired pursuant to
this Agreement will, upon issuance, be duly and validly issued, fully paid and
nonassessable.
(d) The conversion of the Preferred Stock pursuant to
the terms of the Articles Supplementary, will not give any stockholder of the
Company the right to demand payment for his shares under the Corporations &
Associations Code of Maryland.
(e) The Guaranty has been duly executed and delivered
by the Operating Partnership and constitutes the valid and legally binding
obligations of the Operating Partnership enforceable against the Operating
Partnership in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or similar laws relating to creditors' rights or general
principals of equity.
Section 3.3 "Capital Stock and Voting Rights."
(a) The authorized capital stock of the Company on
the date hereof consists of 670,000,000 shares of Common Stock, and 330,000,000
shares of excess stock. As of the date hereof, there are 6,275,000 shares of
Common Stock issued and outstanding, and no shares of any other class or series
of stock issued and outstanding. All such issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. The Company has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities the holders of which have the
right to vote) with the stockholders of the Company on any matter. Other than as
set forth in the Company Reports, there are no existing options, warrants,
calls, subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company to issue, transfer or sell directly or
indirectly any shares of capital stock or other equity interests of the Company
or which entitle any person to acquire from the Company any shares of capital
stock or other equity interest of the Company.
(b) Except for interests in the Subsidiaries of the
Company, and except as set forth in the Company Reports, none of the Company or
any of its Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than investments in short-term investment
securities), which would have a material effect on the business prospects and
condition (financial or otherwise) and operations of the Company;
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(c) The outstanding shares of Common Stock have been
issued in accordance with the registration or qualification provisions of the
Securities Act and relevant state securities laws or pursuant to valid
exemptions thereto;
(d) Except as set forth in the Company Reports, the
Company is not obligated to register under the Securities Act any of its
currently outstanding securities or any of its securities that may subsequently
be issued.
Section 3.4 "No Conflicts; No Defaults; Required Filings and
Consents." Except as contemplated hereby, neither the execution and delivery by
the Company hereof nor the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof, will:
(a) Violate, conflict with, or result in a breach of,
any provisions of the Company Charter or Bylaws of the Company;
(b) Result in a breach or violation of, a default
under, or the triggering of any payment or other obligations pursuant to, or
accelerate vesting under, any of the Company stock option plans or Operating
Partnership Unit option plans or similar compensation plan or any grant or award
made under any of the foregoing;
(c) Violate or conflict with any law, regulation,
judgment, order, writ, decree or injunction applicable to the Company or its
Subsidiaries except where any such violation or conflict, individually or in the
aggregate, could not result in a Material Adverse Effect;
(d) Except as set forth in Schedule 3.4, violate or
conflict with or result in a breach of any provision of, or constitute a default
(or any event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of the Company or its
Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which the Company or its Subsidiaries is a party, or by which the Company or its
Subsidiaries or any of their properties is bound or affected which could,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect; or
(e) Require any consent, approval or authorization
of, or declaration, filing or registration with, any Government Authority, other
than any filings required under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), state securities laws ("Blue Sky Laws") (collectively, the
"Regulatory Filings"), and any filings required to be made with the Maryland
State Department of Assessments and Taxation, the Recorder of Deeds or similar
office in any applicable jurisdiction or any national securities exchange on
which the Common Stock is listed.
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Section 3.5 "SEC and Other Documents; Financial Statements;
Undisclosed Liabilities."
(a) The Company has delivered or made available to
Buyer the registration statement of the Company filed with the Securities and
Exchange Commission ("SEC") in connection with the Company's initial public
offering of Common Stock, and all exhibits, amendments and supplements thereto
(collectively, the "Company Registration Statement"), and each registration
statement, report, proxy statement or information statement and all exhibits
thereto prepared by it or relating to its properties since the effective date of
the Company Registration Statement, each in the form (including exhibits and any
amendments thereto) filed with the SEC (collectively, the "Company Reports").
The Company Reports were filed with the SEC in a timely manner and constitute
all forms, reports and documents required to be filed by the Company under the
Securities Act, the Exchange Act and the rules and regulations promulgated
thereunder (the "Securities Laws"). As of their respective dates, the Company
Reports (i) complied as to form in all material respects with the applicable
requirements of the Securities Laws and (ii) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they were made, not misleading. To the Company's
knowledge, there is no unresolved violation asserted by any Government Authority
with respect to any of the Company Reports.
(b) Each of the balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presented the financial position of the entity or entities
to which it relates as of its date and each of the statements of operations,
stockholders' equity (deficit) and cash flows included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presented the results of operations, retained earnings or cash flows, as
the case may be, of the entity or entities to which it relates for the periods
set forth therein, in each case in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as may be noted therein and except, in the case of the
unaudited statements, normal recurring year-end adjustments which would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(c) Except as, and to the extent, set forth in the
Company Reports or any Schedule hereto, to the Company's knowledge, none of the
Company or any of its Subsidiaries has any Liabilities (nor do there exist any
circumstances) that would, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
Section 3.6 "Litigation; Compliance With Law."
(a) Except as disclosed in the Company Reports, there
are no Actions pending or, to the Company's knowledge, threatened against the
Company or any of its Subsidiaries that would, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect or result in any
material change in the equity ownership of the Company, or which in any manner
question the validity of this Agreement, the Loan Agreement, the Stockholders
Agreement or the Registration Rights Agreement.
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(b) None of the Company or its Subsidiaries is in
violation of any law, rule, regulation, order, writ, decree or injunction of any
Government Authority or any body having jurisdiction over them or any of their
respective properties which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
Section 3.7 "Investment Company." The Company is not, and after giving
effect to the sale and issuance of the Preferred Stock, will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.8 "Solicitation; Access to Information." No form of general
solicitation or general advertising was used by the Company or, to the best of
its knowledge, any other person acting on its behalf, in respect of or in
connection with the offer and sale of the Preferred Stock.
Section 3.9 "Absence of Certain Changes or Events." Since March 31,
1996, the Company and each of its Subsidiaries has conducted its business only
in the ordinary course of such business and has not acquired any real estate
other than in the ordinary course of business or entered into any financing
arrangements in connection therewith other than in the ordinary course of
business, and there has not been (a) any change, circumstance or event that
could reasonably be expected to result in a Material Adverse Effect, (b) any
declaration, setting aside or payment of any dividend or other distribution with
respect to the Common Stock other than any publicly declared quarterly dividends
on the Common Stock, (c) any commitment, contractual obligation, borrowing,
capital expenditure or transaction (each, a "Commitment") entered into by the
Company or any of its Subsidiaries, other than Commitments which could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect, or (d) any change in the Company's accounting principles,
practices or methods which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect.
Section 3.10 "Tax Matters; REIT and Partnership Status."
(a) The Company and each of its Subsidiaries have
timely filed with the appropriate taxing authority all Tax Returns required to
be filed by it or has timely requested extensions and such request has been
granted and has not expired. Each such Tax Return is true, complete and correct
in all material respects. Except as set forth on Schedule 3.10, the Company and
its Subsidiaries have paid, within the time and manner prescribed by law all
Taxes that are due and payable, except where the failure to do so could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect. The Company and each of its Subsidiaries have properly accrued
all Taxes for such periods subsequent to the periods covered by such Tax Returns
as required by GAAP. None of the Company or any of its Subsidiaries has executed
or filed with the IRS or any other taxing authority any agreement now in effect
extending the period for assessment or collection of any Tax. None of the
Company or any of its Subsidiaries is a party to any pending action or
proceedings by any taxing authority for assessment or collection of any Tax, and
no claim for assessment or collection of any Tax has been asserted against it
and no basis exists for any such claim or assessment. True and complete copies
of all federal, state and local income or franchise Tax Returns filed by the
Company and each of its Subsidiaries for 1994 and 1995 and all written
communications between the relevant taxing authorities and Buyer relating
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thereto have been delivered to Buyer or will be made available to
representatives of Buyer. No claim of which the Company has received notice has
been made by an authority in a jurisdiction where the Company or any of its
Subsidiaries does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. Except as set forth on Schedule 3.10, there are no Tax
Liens upon the assets of the Company or any Subsidiary. The Company has not
received a Tax Ruling (other than the Tax Ruling previously received by the
Company regarding its status as a REIT) or entered into a Closing Agreement with
any Tax Authority that would have a continuing adverse effect after the Initial
Closing Date. No event, transaction, act or omission has occurred which will
result in the Company becoming liable to pay or to bear any Tax as a transferee,
successor or otherwise which is primarily or directly chargeable or attributable
to any other person, firm or company, which has not been properly accrued as
required by GAAP and which could, individually or in the aggregate, reasonably
be expected to result in a Material Adverse Effect. The Company and each
Subsidiary have no actual or contingent material liability (whether by reason of
any indemnity, warranty, tax sharing agreement or otherwise) to any other person
in respect of any actual, contingent or deferred liability of such person for
Taxes. The Company and each Subsidiary have complied (and will comply) in all
respects with the provisions of the Code relating to the payment and withholding
of Taxes, including, without limitation, the withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3606, and 6041
and 6049, as well as similar provisions under any other laws, and have, within
the time and in the manner prescribed by law, withheld and paid over to the
proper governmental authorities all amounts required in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder, or
other third party which could, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(b) The Company (i) has in its federal income tax
return for its tax year ended December 31, 1994 elected to be taxed as a real
estate investment trust ("REIT") within the meaning of Section 856 of the Code
(the "Election"), such Election has remained in effect, (ii) has complied (or
will comply) with all applicable provisions of the Code relating to a REIT, for
each of its taxable years, (iii) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for each of its taxable years,
(iv) has not taken or omitted to take any action which could result in a
challenge to its status as a REIT, and, no such challenge of which the Company
has received notice is pending or threatened, and (v) will not be rendered
unable to qualify as a REIT for federal income tax purposes as a consequence of
the transactions contemplated hereby. As of the date hereof, (x) the Company is
a "domestically-controlled" REIT within the meaning of Code Section
897(h)(4)(B), and (y) all non-domestic beneficial owners of Common Stock are set
forth in Schedule 3.10 as of the date set forth therein. Except as set forth in
the Company Reports, to the Company's knowledge no person or entity which would
be treated as an "individual" for purposes of Section 542(a)(2) of the Code (as
modified by Section 856(h) of the Code) owns or would be considered to own
(taking into account the ownership attribution rules under Section 544 of the
Code, as modified by Section 856(h) of the Code) in excess of 6% of the value of
the outstanding equity interest in the Company.
(c) Any amount or other entitlement that could be
received (whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated hereby by any employee, officer, or
director of the Company or the Operating Partnership or any of
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their Affiliates who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment, severance
or termination agreement, other compensation arrangement or plan currently in
effect would not be characterized as an "excess parachute payment" (as such term
is defined in Section 280G(b)(1) of the Code).
(d) The disallowance of a deduction under Section
162(m) of the Code for employee remuneration will not apply to any amount paid
or payable by the Company or any of its Subsidiaries under any contract, stock
plan, program, arrangement or understanding currently in effect.
(e) The Operating Partnership and each Subsidiary of
the Company and the Operating Partnership organized as a partnership (and any
other Subsidiary that files Tax Returns as a partnership for federal income tax
purposes) have at all times been classified as partnerships for federal income
tax purposes.
Section 3.11 "Agreements, Etc."
(a) Neither the Company nor any of its Subsidiaries
is in default under or in violation of any provision of the Company Charter, the
Bylaws of the Company or the Partnership Agreement (or equivalent documents) or
any agreement filed as an exhibit to the Company Reports except where such
default or violation would not result in a Material Adverse Effect.
(b) Other than agreements relating to the Camarillo
refinancing, all material agreements, as of the date hereof, entered into by the
Company or any of its Subsidiaries, except for agreements entered into in the
ordinary course of business, relating to the indebtedness of the Company, the
development or construction of, additions or expansions to, or management or
leasing services for commercial or residential buildings or other real
properties which are currently in effect and under which the Company or any of
its Subsidiaries currently has, or expects to incur, any material obligation and
which are required to be described in the Company Reports, are described in the
Company Reports. No payment, if any thereunder, are delinquent and no notice of
such delinquency thereunder has been received by the Company, except where such
default or violation would not result in a Material Adverse Effect. True and
complete copies of such agreements with all amendments and supplements thereto
have been delivered to Buyer.
Section 3.12 "Financial Records; Company Charter and Bylaws; Corporate
Records."
(a) The books of account and other financial records
of the Company and each of its Subsidiaries are in all material respects true
and complete, have been maintained in accordance with good business practices,
and are accurately reflected in all material respects, as required by GAAP, in
the financial statements included in the Company Reports. Except as set forth in
the notes thereto, all such financial statements were prepared in accordance
with GAAP and fairly present the consolidated financial results of operation of
the Company and its consolidated Subsidiaries as of the respective dates thereof
and for respective periods covered thereby. Except as described in the Company
Reports, the financial conditions of each Subsidiary are consolidated with those
of the Company.
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(b) The Company has previously delivered or made
available to Buyer true and complete copies of the Company Charter and the
Bylaws of the Company, as amended to date, the Partnership Agreement, and the
charter, Bylaws, organization documents, partnership agreements and joint
venture agreements of the Subsidiaries, and all amendments thereto.
(c) The minute books and other records of corporate
or partnership proceedings of the Company and each of its Subsidiaries will be
made available to Buyer and contain in all material respects accurate records of
all meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of the Company and its Subsidiaries which are corporations and all
actions of the partners of the Operating Partnership and Subsidiaries which are
partnerships, except for documentation of discussions relating to or in
connection with the transactions contemplated hereby or matters related hereto.
Section 3.13 "Properties."
(a) The Company has the requisite power, right
and authority to conduct its business as now conducted, or as proposed to be
conducted by it, and to own and operate the Company Properties consistent with
past practice and in compliance with applicable law and to enjoy uninterrupted
ownership, operation and maintenance of the Company Properties, except where any
such failure could not, individually, or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.
(b) Except as described in the Company Reports
and except as to earthquake insurance, each of the Company and the Subsidiaries
is insured by insurers of recognized financial responsibility against such
losses and risks in such amounts as are prudent and customary in the Company's
business, and none of Company and the Subsidiaries have any reason to believe
that it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue it's business, at a cost that could not reasonably be
expected to result in a Material Adverse Effect.
(c) Each of the Company and the Subsidiaries
possesses such certificates, authorizations or permits issued by the appropriate
regulatory agencies or bodies necessary to conduct the business now conducted by
it, or proposed to be conducted by it, and none of the Company or any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit which, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could reasonably be expected to result in a Material Adverse Effect.
3.14 "Environmental Matters."
(a) Except as disclosed in the environmental
reports set forth on Schedule 3.14 or in the Company Reports, (A) to the
knowledge of the Company, the Environment at each Company Property is free of
any Hazardous Substance except for any Hazardous Substance that could not
reasonably be expected to have a Material Adverse Effect;
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(B) none of the Company, or any Subsidiary and, to the knowledge of the Company,
no prior owner of any Company Property has caused or suffered to occur any
Release of any Hazardous Substance into the Environment on, in, under or from
any Company Property in violation of any Environmental Law applicable to such
Company Property in an amount that would reasonably be expected to have a
Material Adverse Effect and no condition exists on, in or under any Company
Property or, to the knowledge of the Company, any property adjacent to any
Company Property that could reasonably be expected to result in the occurrence
of material liabilities under, or any material violations of, any Environmental
Law applicable to such Company Property, give rise to the imposition of any
material Lien under any Environmental Law, or cause or constitute a material
environmental hazard to any property, person or entity, except where such
condition or violation could not result in a Material Adverse Effect; (C)
neither of the Company, nor any Subsidiary is engaged in or intends to engage in
any manufacturing or any other similar operations at any Company Property and,
to the knowledge of the Company, no prior owner of any Company Property engaged
in any manufacturing or any similar operations at any Company Property that (1)
require the use, handling, transportation, storage, treatment or disposal of any
Hazardous Substance (other than paints, stains, cleaning solvents, insecticides,
herbicides, or other substances that are used in the ordinary course of
operating any Property and in compliance with all applicable Environmental Laws)
or (2) require permits or are otherwise regulated pursuant to any Environmental
Law; (D) neither of the Company, nor any Subsidiary and, to the knowledge of the
Company, no prior owner of any Company Property has received any notice of a
claim under or pursuant to any Environmental Law applicable to a Company
Property or under common law pertaining to Hazardous Substances on any Company
Property or pertaining to other property at which Hazardous Substances generated
at any Company Property have come to be located; (E) none of the Company or any
Subsidiary and, to the best knowledge of the Company, no prior owner of any
Company Property has received any notice from any Governmental Authority
claiming any violation of any Environmental Law that is uncured or unremediated
as of the date hereof; and (F) no Company Property (1) is included or proposed
for inclusion on the National Priorities List issued pursuant to CERCLA (as
defined below) by the United States Environmental Protection Agency (the "EPA")
or on the Comprehensive Environmental Response, Compensation, and Liability
Information System database maintained by the EPA as a potential CERCLA removal,
remedial or response site or (2) is included or proposed for inclusion on, any
similar list of potentially contaminated sites pursuant to any other applicable
Environmental Law nor has the Company, or any Subsidiary received any written
notice from the EPA or any other Governmental Authority proposing the inclusion
of any Property on such list.
(b) As used herein, "Hazardous Substance" shall
include any hazardous substance, hazardous waste, toxic or dangerous substance,
pollutant, asbestos-containing materials, PCBs, pesticides, explosives,
radioactive materials, dioxins, urea formaldehyde insulation, pollutant or
waste, including any such substance, pollutant or waste identified, listed or
regulated under any Environmental Law (including, without limitation, materials
listed in the United States Department of Transportation Optional Hazardous
Material Table, 49 C.F.R. Section 172.101, as the same may now or hereafter be
amended, or in the EPA's List of Hazardous Substances and Reportable Quantities,
40 C.F.R. Part 3202, as the same may now or hereafter be amended); "Environment"
shall mean any surface water, drinking water, ground
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water, land surface, subsurface strata, river sediment, buildings and
structures; "Environmental Law" shall mean the Comprehensive Environmental
Response, Compensation and Liability Act, as amended (42 U.S.C. Section 9601, et
seq.,) ("CERCLA"), the Resource Conservation Recovery Act, as amended (42 U.S.C.
Section 6901, et seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401,
et seq.), the Clean Water Act, as amended (33 U.S.C. Section 1251, et seq.), the
Toxic Substances Control Act, as amended (15 U.S.C. Section 2601 et seq.), the
Toxic Substances Control Act, as amended (29 U.S.C. Section 651, et seq.), the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801, et
seq.), together with all rules, regulations and orders promulgated thereunder
and all other federal, state and local laws, ordinances, rules, regulations and
orders relating to the protection of the environment from environmental effects;
and "Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, emanating or
disposing of any Hazardous Substance into the Environment, including, without
limitation, the abandonment or discard of barrels, containers, tanks (including,
without limitation, underground storage tanks) or other receptacles containing
or previously containing any Hazardous Substance or any release, emission,
discharge or similar term, as those terms are defined or used in any
Environmental Law.
3.15 "Employees and Employee Benefit Plans"
(a) The Company Reports or Schedule 3.15(a) sets
forth a complete and accurate list of all Employee Benefit Plans which affect
Employees of the Company or any of its Subsidiaries. With respect to each
Employee Benefit Plan and each material Benefit Arrangement (collectively,
"Company Plan") (i) the Company and each of its Subsidiaries is in compliance in
all material respects with the terms of each Company Plan and with the
requirements prescribed by all applicable statutes, orders or government rules
or regulations, (ii) the Company and each of its Subsidiaries has contributed
all amounts due under each Company Plan, and (iii) none of the Company or any of
its Subsidiaries has any funding commitment or other liabilities except as
reserved for in the financial statements in or incorporated by reference into
the Company Reports, and, in the case of clauses (i) through (iii), except for
such matters as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. None of the Company or any of
its Subsidiaries has made any commitment to establish any new Employee Benefit
Plan, to modify any Employee Benefit Plan, or to increase benefits or
compensation of Employees of the Company or any of its Subsidiaries (except for
normal increases in compensation consistent with past practices), and to the
Company's knowledge, no intention to do so has been communicated to Employees of
the Company or any of its Subsidiaries. There are no pending or, to the
Company's knowledge, anticipated claims against or otherwise involving any of
the Company Plans or any fiduciaries thereof with respect to their duties to the
Company Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Company Plan activities) has been
brought against or with respect to any such Company Plans that can reasonably be
expected to result in a Material Adverse Effect.
(b) For purposes hereof, "Employee Benefit Plans"
means each and all "employee benefit plans" as defined in Section 3(3) of ERISA
maintained or contributed to by a party hereto or in which a party hereto
participates or participated and which provides benefits to
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Employees, including (i) any such plans that are "employee welfare benefit
plans" as defined in Section 3(1) of ERISA, including retiree medical and life
insurance plans ("Welfare Plans"), and (ii) any such plans that constitute
"employee pension benefit plans" (including "multiemployer plans") as defined in
Section 3(2) of ERISA ("Pension Plans"). "Benefit Arrangements" means life and
health insurance, hospitalization, savings, bonus, deferred compensation,
incentive compensation, holiday, vacation, severance pay, sick pay, sick leave,
disability, tuition refund, service award, company car, scholarship, relocation,
patent award, fringe benefit, individual employment, consultancy or severance
contracts and agreements and other policies or practices of a party hereto
providing employee or executive compensation or benefits to Employees, other
than Employee Benefit Plans. "Employees" mean all current employees, former
employees and retired employees of a party hereto or any of its Subsidiaries,
including employees on disability, layoff or leave status.
(c) Neither the Company nor any other employer
that is (or at any relevant time was) part of a controlled group (as defined in
Section 412(l)(8)(C) of the Code) of which the Company is (or at any relevant
time was) a member maintains or has ever maintained a plan covered by Title IV
of ERISA. Neither the Company nor any such employer has engaged in any
transaction described in Section 4069 or Section 4212(c) of ERISA.
(d) The Company represents and warrants
that through its investment in the Operating Partnership of which it is the sole
general partner and owner of 77.2% of the ownership interests therein, it has
been actively engaged in the management or development of real estate in the
ordinary course of its business at all times from the date of its first
long-term investment that was not a short-term investment of funds pending
long-term commitment, ("REOC Qualification Date") to and including the Initial
Closing Date, and that it will continue to be so engaged in the management or
development of real estate so long as Buyer has any interest in any equity or
debt issued by the Company.
(e) The Company represents and warrants that the
"real estate" referenced above which was purchased on the REOC Qualification
Date and thereafter includes the Company Properties. To the extent any of the
Company Properties are subject to tenant leases (the "Leases"), the Company has
substantial responsibilities under each of the Leases, and none of the Leases
provide that substantially all management and maintenance activities with
respect to the Property in question or any portion thereof are the
responsibility of the tenant leases.
(f) The Company represents that it has not
merely passively assumed the risks of its real estate ownership, but that the
return to its stockholders from its investment in the Properties has been and is
based in part on the cash flow and capital appreciation of the Properties, and
that such return depends in substantial part on the success of the Company's
management and development efforts with respect to the Company Properties.
(g) The Company represents and warrants that the
employees of the Company perform most of the development and management
functions of the real estate business described herein, except that the Company
has employed independent contractors, each of which
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is terminable without cause and without substantial penalty upon reasonable
short notice, to perform certain of the day-to-day management activities
associated with the Company Properties. In any event, the Company represents and
warrants that it devotes substantial resources to such management and
development activities and to the oversight of its independent contractors who
perform such activities.
(h) The Company covenants and warrants that it
will comply with requirements, and take all procedural action and cause the
Operating Partnership to take all procedural actions necessary, to maintain its
status as a "real estate operating company" as such term is defined in 29 C.F.R.
Section 2510.3-101 (a "REOC"). Specifically, but without limitation, the Company
covenants that it has or it will establish an "annual valuation period" (as such
term is defined in 29 C.F.R., Section 2510.3-101). The Company agrees to certify
to Buyer its compliance with the requirements recited in this paragraph within
10 days after the close of each annual valuation period.
Section 3.16 "Affiliate Transactions." The Company Reports set forth
an accurate description of all transactions with Affiliates, which are
required to be included therein. A true and complete copy of all agreements or
contracts relating to any such transaction has been made available to Buyer.
Except as set forth in the Company Reports, all such Affiliate transactions were
conducted on an arm's-length basis.
Section 3.17 "Maryland Takeover Law." The terms of Section 3-602 and
Subtitle 7 of Title 3 of the Corporations & Associations Code of Maryland will
not apply to Buyer or any transaction contemplated hereby.
Section 3.18 "Brokers or Finders." No agent, broker, investment banker
or other firm or person, including any of the foregoing that is an Affiliate of
the Company, is or will be entitled to any broker's or finder's fee or any other
commissions or similar fee from the Company in connection with this Agreement or
any of the transactions contemplated hereby for which Buyer will be responsible
except as a result of actions by Buyer.
Section 3.19 "Knowledge Defined." As used herein, the phrase "to the
Company's knowledge" (or words of similar import) shall include the actual
knowledge after due inquiry of George Marcus, Keith Guericke, Michael J. Schall,
and Jordan Ritter and includes any facts, matters or circumstances set forth in
any written notice from any Government Authority, and also including any matter
of which Buyer informs the Company in writing. The term "due inquiry" is hereby
defined to mean such inquiry by the applicable person as such person would
normally be reasonably expected to make in the ordinary course of his regular
and usual duties as either an employee or as a board member, as the case may be,
of the Company.
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ARTICLE 4
Representations and Warranties of Buyer
Each Buyer hereby represents and warrants to the Company, as follows:
Section 4.1 "Organization." (a) Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite partnership power and authority to own,
operate, lease and encumber its properties and carry on its business as now
conducted, and to enter into this Agreement, the Stockholders Agreement and to
perform its obligations hereunder and thereunder.
Section 4.2 "Due Authorization." The execution, delivery and
performance of this Agreement, the Registration Rights Agreement, and the
Stockholders Agreement have been duly and validly authorized by all necessary
partnership action on the part of Buyer. The execution, delivery and performance
of the Loan Agreement has been duly and validly authorized by all necessary
limited liability company action on the part of Lender. This Agreement has been
duly executed and delivered by Buyer for itself and constitutes the valid and
legally binding obligations of Buyer enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights or general principles of
equity. The Loan Agreement has been duly executed and delivered by the Lender
for itself and constitutes the valid and legally binding obligations of the
Lender enforceable against the Lender in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity.
Section 4.3 "Conflicting Agreements and Other Matters." Neither the
execution and delivery of this Agreement nor the performance by Buyer of its
obligations hereunder nor the execution and delivery of the Loan Agreement nor
the performance by the Lender of its obligations thereunder will conflict with,
result in a breach of the terms, conditions or provisions of, constitute a
default under, result in the creation of any mortgage, security interest,
encumbrance, Lien or charge of any kind upon any of the properties or assets of
Buyer or Lender pursuant to, or require any consent, approval or other action by
or any notice to or filing with any Government Authority pursuant to, the
organizational documents or agreements of Buyer or Lender, or any agreement,
instrument, order, judgment, decree, statute, law, rule or regulation by which
Buyer or Lender is bound, except for filings after the Initial Closing, the
Initial Exchange Closing or any Subsequent Closing under Section 13(d) of the
Exchange Act.
Section 4.4 "Acquisition for Investment; Sophistication; Source of
Funds." Buyer is acquiring the Preferred Stock being purchased by it for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof, and Buyer has no present intention or
plan to effect any distribution of shares of Preferred Stock, provided that the
disposition of Preferred Stock owned by Buyer shall at all times be and remain
within its control and, in the ordinary course of its affairs, the Buyer may
effect transfer of any of its assets, including the Preferred Stock, subject to
the provisions of this Agreement and the Registration Rights Agreement. Buyer is
able to bear the economic risk of the acquisition of Preferred Stock pursuant
hereto and can afford to sustain a total loss on such investment, and has such
knowledge
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and experience in financial and business matters that it is capable of
evaluating the merits and risks of the proposed investment, and therefore has
the capacity to protect its own interests in connection with the acquisition of
Preferred Stock pursuant hereto.
Section 4.5 "Brokers or Finders." No agent, broker, investment banker
or other firm or person, including any of the foregoing that is an Affiliate of
Buyer is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from Buyer in connection with this Agreement or any of
the transactions contemplated hereby for which the Company will be responsible
except as a result of actions by the Company.
Section 4.6 "Investment Company Matters." Buyer is not and after
giving effect to the purchase of Preferred Stock contemplated hereby will not
be, an "investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
Section 4.7 "Accredited Investor." Buyer is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, as presently in effect.
ARTICLE 5
Covenants Relating to Closings
Section 5.1 "Taking of Necessary Action."
(a) Each party hereto agrees to use commercially
reasonable efforts promptly to take or cause to be taken all action and promptly
to do or cause to be done all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, the Loan Agreement, the
Registration Rights Agreement and the Stockholders Agreement, subject to the
terms and conditions hereof and thereof, including, without limitation, to cause
necessary or appropriate amendments to the Operating Partnership's Partnership
Agreement; provided, however, this proviso shall not apply to a party's ability
to exercise its discretionary rights hereunder to the extent such party's
obligations hereunder are conditioned upon the performance of certain conditions
precedent which shall be satisfactory to such party in such party's sole
discretion. The Company shall use its best efforts promptly to take or cause to
be taken all action and promptly to do or cause to be done all things necessary,
proper or advisable under applicable laws or regulations to consummate and make
effective the Charter Amendment and the IRS Approval.
(b) As promptly as practicable after the date hereof,
the Company shall prepare and file with the SEC a preliminary proxy statement
(the "Proxy Statement") by which the Company's stockholders will be asked to
approve the Charter Amendment and other matters in connection with the
transactions contemplated hereby as the Company may reasonably suggest and the
Buyer may reasonably request, which proposed Charter Amendment shall be in form
and substance satisfactory to Buyer. The Proxy Statement as initially filed with
the SEC, as it may be amended and refiled with the SEC and as it may be mailed
to the Company's stockholders, shall be in form and substance reasonably
satisfactory to Buyer. The Company shall use its reasonable
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efforts to respond to any comments of the SEC, and to cause the Proxy Statement
to be mailed to the Company's stockholders at the earliest practicable time. As
promptly as practicable after the date hereof, the Company shall prepare and
file any other filings required under the Exchange Act, the Securities Act or
any other federal, state or local laws relating to this Agreement and the
transactions contemplated hereby, including under the HSR Act (and shall
promptly on request therefore provide Buyer with information requested by Buyer
in connection with Buyer's HSR matters and filings) and state takeover laws (the
"Other Filings"), and Buyer shall prepare and file any filings required by Buyer
under the HSR Act and shall cooperate with the Company in the preparation of any
such filings. The Company will notify Buyer promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff or
any other government officials for amendments or supplements to the Proxy
Statement or any Other Filing or for additional information and will supply
Buyer with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement or
any Other Filing. The Proxy Statement and any Other Filing shall comply in all
material respects with all applicable requirements of law. Buyer shall provide
the Company all information about Buyer required to be included or incorporated
by reference in the Proxy Statement or any Other Filing and shall otherwise
cooperate with the Company in taking the actions described in this paragraph.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement or any Other Filing, the Company or Buyer, as
the case may be, shall promptly inform the other party of such occurrence and
cooperate in filing with the SEC or its staff or any other government officials,
and/or mailing to stockholders of the Company, such amendment or supplement. The
Proxy Statement shall include the recommendation of the Board of Directors of
the Company that the stockholders of the Company vote in favor of and approve
the Charter Amendment and the issuance of Preferred Stock pursuant to this
Agreement.
(c) Buyer agrees to assist the Company in its
preparation of a submission to the IRS seeking IRS Approval, including
information as to the nature of Buyer's investors, provided that Buyer may
refuse information if it reasonably believes that not doing so would be adverse
to its interests. Such submission shall be in form and substance reasonably
satisfactory to Buyer. The Company will notify Buyer promptly of the receipt of
any comments, notices or requests for additional information from IRS or its
staff and will supply Buyer with copies of all correspondence between the
Company or any of its representatives on one hand and the IRS or its staff on
the other hand.
(d) The Company shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon the Charter Amendment and shall use its best efforts to cause the
stockholder approval of the Charter Amendment by August 31, 1996.
(e) The parties agree to negotiate in good faith
whether to issue Operating Partnership Units to Buyer as contemplated hereby as
promptly as practicable after the date hereof. In the event the parties mutually
agree for the exchange of Operating Partnership Units, the Company shall propose
and submit an amendment to the Partnership Agreement to the limited partners of
the Operating Partnership to provide for the exchange of the Loan and Preferred
Stock for Operating Partnership Units and shall seek a written consent or call a
meeting to vote
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thereon. The Company shall vote all of the Operating Partnership
Units held by it at the time of such written consent or meeting in favor of such
Amended Partnership Agreement.
(f) The Company shall use its best efforts to obtain
the requisite lender consents required hereby.
Section 5.2 "Registration Rights Agreement." At the Initial Closing,
the Company and Buyer shall enter into the Registration Rights Agreement.
Section 5.3 "Stockholders Agreement." At the Initial Closing, the
Company, Buyer and the Messrs. Marcus and Guericke shall enter into the
Stockholders Agreement.
Section 5.4 "Modification to Structure." The parties agree to
negotiate in good faith modification to the structure of the Operating
Partnership and/or the Operating Partnership's investments in, and ownership of,
the Property of the Company, (a) to avoid the imposition of a corporate tax on
any income of the Operating Partnership, (b) to minimize the effects of UBTI on
a direct or indirect investor of the Buyer or (c) to assist Buyer in respect of
requirements pertinent to Buyer under ERISA. Unless and until such date Buyer
has distributed to its investors aggregate funds exceeding 50% of the net
acquisition cost of all assets which it has purchased to such date, the Company
and the Operating Partnership, considered as a single entity, or any entity in
which the partners and/or the Company and the Operating Partnership, considered
as a single entity, owns an interest and which owns any portion of the Property,
shall qualify as and/or remain an "operating company" under the plan asset rules
of ERISA at 29 C.F.R. 2510.3-101 provided that such actions shall not have a
material adverse ffect on Operating Partnership limited partners, considered as
a whole.
Section 5.5 "Designation of Directors."
(a) The Company shall use its best efforts to cause
the stockholders of the Company to approve and adopt an amendment to the Company
Charter, which permits the termination of Directors such that, upon a failure by
the Company to pay dividends on the Preferred Stock in accordance with the
Articles Supplementary or in the event of certain breaches thereof: (i) the
holders of Preferred Stock shall have the power to cause the removal or
resignation of such requisite number of Directors and to appoint the designees
to fill such vacancies or, alternatively, (ii) that the Company shall increase
the number of authorized directors of its Board of Directors and appoint such
persons designated by the holders of Preferred Stock to fill such newly-created
vacancies.
(b) The Company shall cause the committees of the
Board of Directors to include Preferred Stockholder director designees, as set
forth in the Articles Supplementary.
Section 5.6 "Listing of Preferred Stock." Upon the request of the
Buyer, the Company shall use commercially reasonable efforts to list the
Preferred Stock on such securities exchanges as may be mutually agreeable
between the parties, including, without limitation, the Singapore, Amsterdam and
Luxembourg Securities Exchanges, provided that the cost thereof including any
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periodic reporting or listing costs shall be borne by the Buyer and provided
further that in the Company's reasonable discretion such listing shall not have
an adverse effect on the Company.
Section 5.7 "Public Announcements, Confidentiality."
(a) Subject to each party's disclosure obligations
imposed by law and any stock exchange or similar rules and the confidentiality
provisions contained in Section 5.7(b), the Company and Buyer will cooperate
with each other in the development and distribution of all news releases and
other public information disclosures with respect to this Agreement, the
Registration Rights Agreement, the Stockholders Agreement and any of the
transactions contemplated hereby or thereby.
(b) Buyer agrees that all information provided to
Buyer or any of its representatives pursuant to this Agreement shall be kept
confidential, and Buyer shall not disclose such information to any persons other
than the directors, officers, employees, financial advisors, legal advisors,
accountants, consultants and affiliates of Buyer who reasonably need to have
access to the confidential information and who are advised of the confidential
nature of such information; provided, however, the foregoing obligation of Buyer
shall not (i) relate to any information that (1) is or becomes generally
available other than as a result of unauthorized disclosure by Buyer or by
persons to whom Buyer has made such information available, (2) is or becomes
available to Buyer on a non-confidential basis from a third party that is not,
to Buyer's knowledge, bound by any other confidentiality agreement with the
Company, or (ii) prohibit disclosure of any information if required by law,
rule, regulation, court order or other legal or governmental process.
(c) The Company agrees that all information provided
to the Company or any of its representatives pursuant to this Agreement shall be
kept confidential, and the Company shall not disclose such information to any
persons other than the directors, officers, employees, financial advisors, legal
advisors, accountants, consultants and affiliates of the Company who reasonably
need to have access to the confidential information and who are advised of the
confidential nature of such information; provided, however, the foregoing
obligation of the Company shall not (i) relate to any information that (1) is or
becomes generally available other than as a result of unauthorized disclosure by
the Company or by persons to whom the Company has made such information
available, (2) is or becomes available to the Company on a non-confidential
basis from a third party that is not, to the Company's bound by any other
confidentiality agreement with Buyer, or (ii) prohibit disclosure of any
information if requested by law, rule, regulation, court order or other legal or
governmental process.
Section 5.8 "Information and Access." For so long as Buyer owns
100,000 shares or more of Preferred Stock, the Company and its Subsidiaries
shall afford to Buyer and Buyer's accountants, counsel and other representatives
full and reasonable access during normal business hours (and at such other times
as the parties may mutually agree) to its properties, books, contracts,
commitments, records and personnel and, during such period, shall furnish
promptly to Buyer (x) a copy of each report, schedule and other document filed
or received by it pursuant to the requirements of the Securities Laws, and (y)
all other information concerning its business, personnel and the Company
Properties as Buyer may reasonably request. Buyer and its
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accountants, counsel and other representatives shall, in the exercise of the
rights described in this Section, not unduly interfere with the operation of the
business of the Company or its Subsidiaries.
Section 5.9 "Notification of Certain Matters." Each of Buyer and the
Company shall use its good faith efforts to notify the other party in writing of
its discovery of any matter that would render any of such party's or the other
party's representations and warranties contained herein untrue or incorrect in
any material respect, but the failure of either party to so notify the other
party shall not be deemed a breach of this Agreement.
ARTICLE 6
Certain Additional Covenants
Section 6.1 "Resale." Buyer acknowledges and agrees that the
securities that Buyer acquires hereunder will not, as of the relevant Closing
thereof, be registered under the Securities Act or the securities laws of any
state and that it may be sold or otherwise disposed of only in one or more
transactions registered under the Securities Act and, where applicable, state
securities laws or as to which an exemption from the registration requirements
of the Securities Act and, where applicable, state securities laws is available.
Section 6.2 "Use of Funds." The Company shall use the funds received
pursuant to the terms hereof, first to repay outstanding indebtedness (of either
the Company or the Operating Partnership) and second for the acquisition or
development by the Operating Partnership of assets.
Section 6.3 "REIT Status." From and after the date hereof and so long
as Buyer owns 10% or more of the Company's outstanding Common Stock (for
purposes of this provision, the Company's convertible securities, including
Preferred Stock, shall be treated as Common Stock on an as-converted basis), the
Company will elect to be taxed as a REIT in its federal income tax returns for
each of its tax years, will comply with all applicable laws, rules and
regulations of the Code relating to a REIT, and will not take any action or fail
to take any action which would result in the loss of its status as a REIT for
federal income tax purposes.
Section 6.4 "Affiliated Transactions." All transactions by and between
the Company and any Affiliate of the Company shall be conducted on an
arm's-length basis, and if any such transaction involves a cost to the Company
to such Affiliate in excess of $500,000 in a single transaction, or in excess of
an aggregate $1,000,000 for a series of transactions with all Affiliates in any
twelve-month period, shall be on terms and conditions no less favorable (when
all aspects of the transactions are considered) to the Company than could be
obtained from non-related persons except as disclosed in the Company Reports.
Section 6.5 "Loan Agreement Covenants." The Company agrees to take
such actions necessary or as may be requested by Buyer to afford Buyer the
rights set forth in the Loan Agreement, which is incorporated herein by
reference, and hereby authorizes Buyer to take such actions as are reasonably
necessary to accomplish such rights. The Buyer agrees to cause Lender to take
such actions necessary or as may be requested by the Company to afford the
Company the rights set forth in the Loan Agreement, which is incorporated herein
by reference, and hereby authorizes the Company to take such actions as are
reasonably necessary to accomplish such rights.
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ARTICLE 7
Conditions to Closings
Section 7.1 "Conditions of Purchase at Initial Closing." The
obligations of Buyer to purchase and pay for the Preferred Stock at the Initial
Closing are subject to satisfaction or waiver of each of the following
conditions precedent:
(a) "Representations and Warranties; Covenants." The
representations and warranties of the Company contained herein shall have been
true and correct in all respects on and as of the date hereof, and shall be true
and correct in all respects on and as of the date of the Initial Closing with
the same effect as though such representations and warranties had been made on
and as of the date of the Initial Closing (except for representations and
warranties that speak as of a specific date or time other than the date of the
Initial Closing), other than, in all such cases, such failures to be true and/or
correct as would not in the aggregate reasonably be expected to have a Material
Adverse Effect; provided, however, that if any of the representations and
warranties is already qualified in any respect by materiality or as to Material
Adverse Effect for purposes of this Section 7.1(a) such materiality or Material
Adverse Effect qualification will be in all respects ignored (but subject to the
overall standard as to Material Adverse Effect set forth immediately prior to
this proviso). The covenants and agreements of the Company to be performed on or
before the date of the Initial Closing in accordance with this Agreement shall
have been duly performed in all respects, other than (except for the Company's
obligation to deliver the relevant shares of Preferred Stock at the Initial
Closing, and for the covenants set forth in Sections 5.2, 5.3 and 6.3 as to
which the proviso set forth in this other-than clause shall not apply) for such
failures to have been performed as would not in the aggregate reasonably be
expected to have a Material Adverse Effect (provided, however, that if any such
covenant or agreement is already qualified in any respect by materiality or as
to Material Adverse Effect for purposes of determining whether this condition
has been satisfied, such materiality or Material Adverse Effect qualification
will be in all respects ignored and such covenant or agreement shall have been
performed in all respects without regard to such qualification (but subject to
the overall exception as to Material Adverse Effect set forth immediately prior
to this proviso)). The Company shall have delivered to Buyer at the Initial
Closing a certificate of an appropriate officer in form and substance reasonably
satisfactory to Buyer dated the date of the Initial Closing to such effect.
In making any determination as to Material Adverse Effect under this
Section 7.1(a) or under Section 7.2(a), the matters set forth in each such
Section shall be aggregated and considered together.
(b) "Preferred Stock; Articles Supplementary." The
Articles Supplementary shall have been duly filed with the State Department of
Assessments and Taxation of the State of Maryland and shall be in full force and
effect in form and substance satisfactory to Buyer.
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(c) "Consents." The Company shall have obtained the
consents set forth in Schedule 3.4.
(d) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which could reasonably be expected to have a
Material Adverse Effect on the ability of the Company to consummate the
transactions contemplated hereby or to issue the Preferred Stock.
(e) "Proceedings." All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyer and Buyer shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
(f) "Opinion of Counsel." Buyer shall have received
an opinion from Morrison & Foerster LLP substantially in form and substance
reasonably satisfactory to Buyer.
(g) "Bylaws." The Company shall have adopted the
amendments to the Company's Bylaws relating to alterations to the size and
composition of the Board of Directors in form and substance reasonably
satisfactory to Buyer.
(h) "Resolutions." Buyer shall have received a
certified copy or resolutions of the Board of Directors in form and substance
satisfactory to Buyer, relating to the Buyer's and its Affiliates' exemption
from the provisions of Section 3 - 602 of the Maryland Corporations and
Associations Code.
(i) "Registration Rights Agreement." Buyer shall have
received the Registration Rights Agreement executed by the Company, in form and
substance reasonably satisfactory to Buyer.
(j) "Stockholders Agreement." Buyer shall have
received the Stockholders Agreement executed by the Company, in form and
substance reasonably satisfactory to Buyer.
(k) "Disclosure Statement." Buyer shall have received
from the Company a Disclosure Statement attaching all Schedules to the
Agreement.
(l) "NYSE Advice." Buyer shall have received the NYSE
Advice.
(m) "Maryland Counsel Opinion." If requested by
Buyer, Buyer shall have received an opinion of the Company's Maryland counsel in
form and substance reasonably satisfactory to Buyer.
(n) "Amendment to Investor Rights Agreement." Buyer
shall have received from the Company a copy of an amendment to that certain
Investor Rights Agreement
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<PAGE> 32
dated as of June 13, 1994 between the Company and the investors party thereto,
whereby such investors shall have agreed that their rights thereunder shall be
subordinated to the rights of holders of Preferred Stock;
(o) "Appointment of Buyer's Designees to Board of
Directors and Committees." The Buyer's designee shall have been appointed to the
Board of Directors and to all committees pursuant to the terms of the Bylaws and
Articles Supplementary.
(p) "Preemptive Rights Agreements." Buyer and Company
shall have executed an agreement providing for preemptive rights of Buyer, in
form and substance reasonably satisfactory to Buyer.
Section 7.2 "Conditions of Purchase at Subsequent Closings." The
obligations of Buyer to purchase and pay for the shares of Preferred Stock at
each Subsequent Closing are subject to satisfaction or waiver of each of the
following conditions precedent:
(a) "Representations and Warranties; Covenants." The
representations and warranties of the Company contained herein shall have been
true and correct in all respects on and as of the date hereof, and as of the
Initial Closing Date. The covenants and agreements of the Company to be
performed on or before the relevant Subsequent Closing Date in accordance with
this Agreement shall have been duly performed in all respects, other than
(except for the Company's obligation to deliver the relevant shares of Preferred
Stock at the relevant Subsequent Closing, as to which the proviso set forth in
this other-than clause shall not apply) for such failures to have been performed
as would not in the aggregate reasonably be expected to have a Material Adverse
Effect, provided, however, that if any such covenant or agreement is already
qualified in any respect by materiality or as to Material Adverse Effect for
purposes of determining whether this condition has been satisfied, such
materiality or Material Adverse Effect or qualification will be in all respects
ignored and such covenant or agreement shall have been performed in all respects
without regard to such qualification (but subject to the overall exception as to
Material Adverse Effect set forth immediately prior to this proviso). The
Company shall have delivered to Buyer at the relevant Subsequent Closing a
certificate of an appropriate officer in form and substance reasonably
satisfactory to Buyer dated the relevant Subsequent Closing Date to such effect.
(b) "No Material Adverse Change." Since the Initial
Closing Date, there shall not have been any change, circumstance or event which
has had or could reasonably be expected to have a Material Adverse Effect.
(c) "Operating Partnership Agreement." If Operating
Partnership Units are to be purchased by Buyer, the Partnership Agreement shall
have been duly and validly amended and restated so that it is in a form which is
satisfactory to both the Company and Buyer (the "Amended Partnership Agreement")
by the requisite vote or consent of the partners of the Operating Partnership,
all as required by and in accordance with the Partnership Agreement.
(d) "Amended Company Charter; Modification of
Ownership Limit." As to Subsequent Closings under Option A or Option B, the
Charter Amendment shall have been approved by the requisite vote of holders of
Common Stock, all as required by and in accordance
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<PAGE> 33
with the Company Charter, and duly filed with the State Department of
Assessments and Taxation of the State of Maryland and shall be in full force and
effect.
(e) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which could reasonably be expected to have a
Material Adverse Effect on the ability of the Company to consummate the
transactions contemplated hereby or to issue the Preferred Stock.
(f) "Proceedings." All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to Buyer and Buyer shall have received all
such counterpart originals or certified or other copies of such documents as
they may reasonably request.
(g) "REIT Status." The Company shall have elected to
be taxed as a REIT in its most recent federal income tax return, and shall be in
compliance with all applicable laws, rules and regulations, including the Code,
necessary to permit it to be taxed as a REIT. The Company shall not have taken
any action or have failed to take any action which would reasonably be expected
to, alone or in conjunction with any other factors, result in the loss of its
status as a REIT for federal income tax purposes.
(h) "Opinion of Counsel." Buyer shall have received
an opinion from Morrison & Foerster LLP in such form and substance reasonably
satisfactory to Buyer.
(i) "IRS Approval." As to the Initial Exchange
Closing under Option D, the IRS Approval shall have been obtained and shall be
in full force and effect.
(j) "Certain Conditions Still True." The conditions
precedent set forth in Sections 7.1(c), (e), (h) and (i) shall continue to be
satisfied or waived in all respects on and as of each relevant Closing Date.
With respect to the Initial Exchange Closing and each
Subsequent Closing:
(k) "HSR Act." Any waiting period applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or beenterminated, and no action shall have been instituted by the
United States Department of Justice or the United States Federal Trade
Commission challenging or seeking to enjoin the consummation of the transactions
contemplated hereby, which action shall not have been withdrawn or terminated,
or the Company and Buyer shall have mutually concluded that no filing under the
HSR Act is required with respect to the transactions contemplated hereby.
Section 7.3 "Conditions of Sale." The obligation of the Company to
issue and sell any Preferred Stock at any closing (including the Initial
Closing) is subject to satisfaction or waiver of each of the following
conditions precedent:
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<PAGE> 34
(a) "Representations and Warranties; Covenants." The
representations and warranties of Buyer contained herein shall have been true
and correct in all respects on and as of the date hereof and as of the date of
the Initial Closing, other than, in all such cases, such failures to be true
and/or correct as would not in the aggregate reasonably be expected to have a
Material Adverse Effect on the Company or Buyer's ability to consummate the
transactions contemplated hereby; provided, however, that if any of the
representations and warranties is already qualified in any respect by
materiality or as to Material Adverse Effect for purposes of this Section 7.3(a)
such materiality or Material Adverse Effect qualification will be in all
respects ignored (but subject to the overall standard as to Material Adverse
Effect set forth immediately prior to this proviso). The covenants and
agreements of Buyer to be performed on or before the relevant Closing Date in
accordance with this Agreement shall have been duly performed in all respects,
other than (except for Lender's obligations under the Loan Agreement, Buyer's
obligation to pay the relevant Purchase Price at the relevant Closing, including
any Closing under Section 2.5(b), and except for Buyer's covenants set forth in
Sections 5.2 and 5.3, as to which the proviso set forth in this other-than
clause shall not apply) for such failures to have been performed as would not in
the aggregate reasonably be expected to have a Material Adverse Effect on the
Company or Buyer's ability to consummate the transactions contemplated hereby
(provided, however, that if any such covenant or agreement is already qualified
in any respect by materiality or as to Material Adverse Effect for purposes of
determining whether this condition has been satisfied, such materiality or
Material Adverse Effect qualification will be in all respects ignored and such
covenant or agreement shall have been performed in all respects without regard
to such qualification (but subject to the overall exception as to Material
Adverse Effect set forth immediately prior to this proviso)). Buyer shall have
delivered to the Company at the relevant Closing a certificate of an appropriate
officer in form and substance reasonably satisfactory to the Company dated the
relevant Closing Date to such effect.
(b) "No Injunction." There shall not be in effect any
order, decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated hereby and
there shall be no pending Actions which would reasonably be expected to have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby or to acquire the Preferred Stock.
(c) "Consents." The Company shall have obtained the
consents set forth in Schedule 3.4.
(d) "Proceedings." All corporate and other
proceedings to be taken by Buyer in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company and the Company shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(e) "Opinion of Counsel." The Company shall have
received an opinion from counsel to Buyer in form and substance reasonably
satisfactory to the Company.
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<PAGE> 35
(f) "Bylaws." The Company shall have adopted the
amendments to the Company's Bylaws relating to alterations to the size and
composition of the Board of Directors.
(g) "Registration Rights Agreement." The Company
shall have received the Registration Rights Agreement executed by the Buyer in
form and substance satisfactory to the Company.
(h) "Stockholders Agreement." The Company shall have
received the Stockholders Agreement executed by the Buyer in form and substance
satisfactory to the Company.
With respect to any Subsequent Closing only:
(x) "Amended Company Charter; Modification of Ownership Limit." As to
Subsequent Closings under Option A or Option B, the Charter Amendment shall have
been approved by the requisite vote of holders of Common Stock, all as required
by and in accordance with the Company Charter, and duly filed with the State
Department of Assessments and Taxation of the State of Maryland and shall be in
full force and effect.
(y) "Operating Partnership Agreement." If Operating Partnership Units
are to be purchased by Buyer, the Partnership Agreement shall have been duly and
validly amended and restated as the Amended Partnership Agreement by the
requisite vote or consent of the partners of the Operating Partnership, all as
required by and in accordance with the Partnership Agreement.
(z) "HSR Act." Any waiting period applicable to the consummation of
the transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the United States
Department of Justice or the United States Federal Trade Commission challenging
or seeking to enjoin the consummation of the transactions contemplated hereby,
which action shall not have been withdrawn or terminated, or the Company and
Buyer shall have mutually concluded that no filing under the HSR Act is required
with respect to the transactions contemplated hereby.
ARTICLE 8
Survival; Indemnification
Section 8.1 "Survival." All representations, warranties and (except as
provided by the last sentence of this Section 8.1) covenants and agreements of
the parties contained herein, including indemnity or indemnification agreements
contained herein, or in any Schedule or Exhibit hereto, or any certificate,
document or other instrument delivered in connection herewith shall survive the
Initial Closing until 18 months after the Initial Closing. No Action or
proceeding may be brought with respect to any of the representations and
warranties, or any of the covenants or agreements which survive until 18 months
after the Initial Closing, unless written notice thereof, setting forth in
reasonable detail the claimed misrepresentation or breach of warranty or breach
of covenant or agreement, shall have been delivered to the party alleged to have
breached such representation or warranty or such covenant or agreement prior to
18 months after the Initial Closing; provided, however, that, if Buyer shall
have complied with this Section 8.1, the damages
34
<PAGE> 36
for breach by the Company of any of the representations and warranties, or any
of the covenants or agreements which survive until 18 months after the Initial
Closing, shall be measured with respect to all of Buyer's purchases of Preferred
Stock hereunder and not with respect only to Buyer's purchases hereunder made
during the period ending 18 months after the Initial Closing, but such
measurement shall not in any event include any shares of Preferred Stock that
Buyer may have purchased other than from the Company. Notwithstanding the
foregoing, those covenants or agreements that contemplate or may involve actions
to be taken or obligations in effect after the Initial Closing shall survive in
accordance with their terms, and representations and warranties of the Company
contained in Section 3.10 herein shall survive until the running of the
applicable statutes of limitations.
Section 8.2 "Indemnification by Buyer or the Company."
(a) Subject to Section 8.1, from and after any
Closing Date, Buyer shall indemnify and hold harmless the Company, its
successors and assigns, from and against any and all damages, claims, losses,
expenses, costs, obligations, and liabilities, including liabilities for all
reasonable attorneys' fees and expenses (including attorney and expert fees and
expenses incurred to enforce the terms of this Agreement) (collectively, "Loss
and Expenses") suffered, directly or indirectly, by the Company by reason of, or
arising out of, (i) any breach as of the date made or deemed made or required to
be true of any representation or warranty made by Buyer in or pursuant to this
Agreement, or (ii) any failure by Buyer to perform or fulfill any of its
covenants or agreements set forth herein. Notwithstanding any other provision of
this Agreement to the contrary, in no event shall Loss and Expenses include a
party's incidental or consequential damages.
(b) Subject to Section 8.1, from and after any
Closing Date, the Company shall indemnify and hold harmless Buyer, its
successors and assigns, from and against any and all Loss and Expenses,
suffered, directly or indirectly, by Buyer by reason of, or arising out of, (i)
any breach as of the date made or deemed made or required to be true of any
representation or warranty made by the Company in or pursuant to this Agreement
and any statements made in any certificate delivered pursuant to this Agreement,
or (ii) any failure by the Company to perform or fulfill any of its covenants or
agreements set forth herein. Notwithstanding any other provision of this
Agreement to the contrary, in no event shall Loss and Expenses include a party's
incidental or consequential damages.
(c) Notwithstanding the foregoing, (i) neither Buyer
nor the Company shall be responsible for any Loss and Expenses as provided by
paragraphs (a) and (b), respectively, of this Section 8.2, until the cumulative
aggregate amount of such Loss and Expenses suffered by Buyer or the Company, as
the case may be, exceeds $1,000,000, and only to the extent such Losses and
Expenses exceed $1,000,000, in which case Buyer or the Company, as the case may
be, shall then be liable for all such Loss and Expenses, and (ii) the cumulative
aggregate indemnity obligation of each of Buyer and the Company under this
Section 8.2 shall in no event exceed $40,000,000. Except with respect to
third-party claims being defended in good faith or claims for indemnification
with respect to which there exists a good faith dispute, the indemnifying party
shall satisfy its obligations hereunder within 30 days of receipt of a notice of
claim under this Article 8.
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<PAGE> 37
Section 8.3 "Third-Party Claims." If a claim by a third party is made
against an Indemnified Party and if such Indemnified Party intends to seek
indemnity with respect thereto under this Article, such Indemnified Party shall
promptly notify the indemnifying party in writing of such claims setting forth
such class in reasonable detail. The indemnifying party shall have 20 days after
receipt of such notice to undertake, through counsel of its own choosing and at
its own expense, the settlement or defense thereof, and the Indemnified Party
shall cooperate with it in connection therewith; provided, however, that the
Indemnified Party may participate in such settlement or defense through counsel
chosen by such Indemnified Party, provided that the fees and expenses of such
counsel shall be borne by such Indemnified Party. The Indemnified Party shall
not pay or settle any claim which the indemnifying party is contesting.
Notwithstanding the foregoing, the Indemnified Party shall have the right to pay
or settle any such claim, provided that in such event it shall waive any right
to indemnity therefor by the indemnifying party. If the indemnifying party does
not notify the Indemnified Party within 20 days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that it elects to
undertake the defense thereof, the Indemnified Party, with the Indemnifying
Party's consent not to be unreasonably withheld or delayed, shall have the right
to contest, settle or compromise the claim but shall not thereby waive any right
to indemnity therefor pursuant to this Agreement.
ARTICLE 9
Miscellaneous
Section 9.1 "Counterparts." This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 9.2 "Governing Law." THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES THEREOF.
Section 9.3 "Consequential Damages." In no event will either party be
liable to the other in contract, tort or otherwise for any consequential,
indirect, exemplary, incidental or special damages arising out of or relating to
this Agreement.
Section 9.4 "Entire Agreement." This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a party hereto (and their successors
and assigns) any rights or remedies hereunder.
Section 9.5 "Notices." All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by
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<PAGE> 38
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to the Company shall be addressed
to:
with a copy to: Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
Attn: Keith Guericke
with a copy to: Michael Schall
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
and another copy to: Jordan Ritter
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
or at such other address and to the attention of such other person as the
Company may designate by written notice to Buyer. Notices to Buyer shall be
addressed to:
with a copy to: Patrick K. Fox
General Counsel
Westbrook Partners, L.L.C.
14400 North Dallas Parkway, #200
Dallas, Texas 75240
with a copy to: Keith Gelb
Vice President
Westbrook Partners, L.L.C.
11150 Santa Monica Boulevard
Los Angeles, California 90023
and another copy to: Allen Curtis Greer, II
Rogers & Wells
200 Park Avenue
New York, New York 10166
Section 9.6 "Successors and Assigns." This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
Section 9.7 "Headings." The Section, Article and other headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or
37
<PAGE> 39
interpretation of this Agreement. All references to Sections or Articles
contained herein mean Sections or Articles of this Agreement unless otherwise
stated.
Section 9.8 "Amendments and Waivers." This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or compiled with. The waiver by
any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
Section 9.9 "Interpretation; Absence of Presumption."
(a) For the purposes hereof, (i) words in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires, (ii)
the terms "hereof', "herein," and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all of the Schedules and Exhibits hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph, Exhibit and
Schedule references are to the Articles, Sections, paragraphs, Exhibits and
Schedules to this Agreement unless otherwise specified, (iii) the word
"including" and words of similar import when used in this Agreement shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iv) the word "or" shall not be exclusive, and (v)
provisions shall apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard
to any presumption or rule requiring construction or interpretation against the
party, drafting or causing any instrument to be drafted.
Section 9.10 "Severability." Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 9.11 "Further Assurances." The Company and Buyer agree that,
from time to time, whether before, at or after any Closing Date, each of them
will execute and deliver such further instruments of conveyance and transfer and
take such other action as may be necessary to carry out the purposes and intents
hereof.
Section 9.12 "Specific Performance." Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
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<PAGE> 40
Section 9.13 "Schedules." Any matter set forth on any Schedule shall be
deemed to be referred to on all other Schedules to which such matter logically
relates and where such reference would be appropriate and can reasonably be
inferred from the matters disclosed on the first Schedule as if set forth on
such other Schedules.
Section 9.14 "Expenses." Except as set forth in this Agreement,
whether or not any purchase of Preferred Stock contemplated hereby is
consummated, all reasonable legal and other costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the Company.
* * *
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<PAGE> 41
IN WITNESS WHEREOF, this Agreement has been signed by, or on behalf of
each of the parties hereto as of the day first above written.
TIGER/WESTBROOK REAL ESTATE FUND,
L.P., a Delaware limited partnership
By: Tiger/Westbrook Real Estate Partners
Management,
L.L.C., a Delaware limited
liability company, General Partner
By: Westbrook Real Estate Fund I,
L.L.C., a Delaware limited
liability company,
Managing Member
By: /s/ W. H. Walton
---------------------------------
William H. Walton III,
Managing Member
TIGER/WESTBROOK REAL ESTATE CO-
INVESTMENT PARTNERSHIP, L.P., a Delaware
limited partnership
By: Tiger/Westbrook Real Estate Partners
Management, L.L.C., a Delaware
limited liability company, General
Partner
By: Westbrook Real Estate Fund I,
L.L.C., a Delaware limited
liability company, Managing
Member
By: /s/ W. H. Walton
-----------------------------
William H. Walton III,
Managing Member
<PAGE> 42
ESSEX PROPERTY TRUST, INC.
By: /s/ Jordan E. Ritter
------------------------
Name: Jordan E. Ritter
Title: Vice President
<PAGE> 1
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT ("Amendment"), dated
as of July 1, 1996, is made by and between Essex Property Trust, Inc., a
Maryland corporation (the "Company"), and Tiger/Westbrook Real Estate Fund,
L.P., a Delaware limited partnership, and Tiger/Westbrook Real Estate
Co-Investment Partnership, L.P., a Delaware limited partnership (individually
and collectively, and including any nominee or nominees in whose name
securities may be held, "Buyer").
R E C I T A L S:
WHEREAS, the parties hereto entered into that certain Stock Purchase
Agreement, dated as of June 20, 1996 (the "Stock Purchase Agreement"),whereby,
subject to certain conditions, the Company agreed to sell to the Buyer and the
Buyer agreed to purchase from the Company an aggregate of 280,000 shares of a
newly authorized series of preferred stock of the Company designated as 8.75%
Convertible Preferred Stock, Series 1996A (the "Preferred Stock"), having the
terms set forth in the form of Company's Articles Supplementary attached as
Exhibit A thereto (the "Articles Supplementary") establishing the rights,
privileges and preferences of the Preferred Stock, at a price of $25.00 per
share;
WHEREAS, an affiliate of Buyer and the Company entered into that
certain Loan Facility Agreement, dated as of June 20, 1996, as amended to the
date hereof (as amended, the "Loan Agreement"), whereby T/W Essex Funding,
L.L.C. (the "Lender"), agreed to lend to the Company and the Company agreed to
borrow from the Lender up to an aggregate of $31,500,000, and portions of such
borrowed funds were, under the circumstances set forth in the Loan Agreement, to
be repaid or exchangeable for additional shares of Preferred Stock or, if the
Company and Buyer so agree, Operating Partnership Units or other interests,
subject to the terms and conditions set forth therein;
WHEREAS, the parties hereto desire, among other things, to provide that
the Buyer shall purchase an aggregate of 340,000 shares of Preferred Stock at
the Initial Closing (as defined herein) and may, subject to the terms and
conditions hereof, of the Stock Purchase Agreement and the Loan Agreement,
purchase up to an aggregate of 1,600,000 shares of Preferred Stock; and
WHEREAS, the parties hereto have agreed, among other things, to amend
and modify the Stock Purchase Agreement as set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and
covenants hereinafter set forth, and other good and valuable consideration had
and received, the parties hereto, upon the terms and subject to the conditions
contained herein, hereby agree as follows:
1
<PAGE> 2
1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Stock Purchase
Agreement has the meaning ascribed to such term in the Stock Purchase Agreement.
Each reference to "hereof," "hereunder," "herein" and "hereby" and each other
similar reference contained in the Stock Purchase Agreement shall from and after
the date hereof refer to the Stock Purchase Agreement as amended hereby.
2. Amendment to Preamble to Definitions. The Preamble to the
Definitions in Article I of the Stock Purchase Agreement shall be amended by
adding "All references in this Agreement to any other agreement or instrument
shall include such other agreement or instrument as the same may be amended,
modified, reaffirmed or supplemented on or before the date hereof in accordance
with the terms thereof." immediately following the first sentence thereof.
3. Amendment to Section 2.1. Section 2.1 of the Stock Purchase
Agreement is hereby amended (a) by deleting the term "280,000" in the third line
thereof and inserting the term "340,000" in its place and stead, and (b) by
deleting the term "$7,000,000" in the fourth line thereof and inserting the term
"$8,500,000" in its place and stead.
4. Amendment to Section 2.2(b). Section 2.2(b) of the Stock
Purchase Agreement shall be amended by deleting the words "including the
delivery of the Diligence Fee," in the first and second lines thereof.
5. Amendment to Section 2.3(I)(a). Section 2.3(I)(a) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead.
6. Amendment to Section 2.3(I)(b). Section 2.3(I)(b) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead.
7. Amendment to Section 2.3(I)(c). Section 2.3(I)(c) of the
Stock Purchase Agreement shall be deleted in its entirety.
8. Amendment to Section 2.3(I)(d). Section 2.3(I)(d) of the
Stock Purchase Agreement shall be amended (a) by deleting the term "$13,000,000"
in the second line thereof and inserting the term "$11,500,000" in its place and
stead, and (b) by deleting the term "520,000" in the third line thereof and
inserting the term "460,000" in its place and stead and (c) by deleting the term
"240,000" in the fifth line thereof and inserting the term "280,000" in its
place and stead.
9. Amendment to Section 5.1(d). Section 5.1(d) of the Stock
Purchase Agreement shall be amended by deleting the words "August 31" in the
third line thereof and inserting the words "September 30" in their place and
stead.
10. Amendment to Article 5. Article 5 of the Stock Purchase
Agreement shall be amended to add the following new Section 5.10:
2
<PAGE> 3
"Section 5.10 Stockholders Agreements. The Company
agrees that it shall not knowingly permit the transfer, or
knowingly allow the Operating Partnership to permit the
transfer, of the interests restricted from transfer pursuant
to the terms of the Stockholders Agreements each dated July 1,
1996 among Mr. Guericke, the Company and Buyer and among Mr.
Marcus, the Company and Buyer, respectively. If the Operating
Partnership is requested to transfer Partnership Units of the
Operating Partnership now held by either of Messrs. Marcus or
Guericke directly, or indirectly by the person or persons
holding of record as reflected in the Company's 1996 Proxy
Statement, the Company will make reasonable inquiries and use
its reasonable efforts to ascertain that any such transfer is
not in violation of the terms of the applicable Stockholders
Agreement. The Company will also monitor the Form 4 and Form 5
Reports that each of Messrs. Marcus or Guericke files with the
Securities and Exchange Commission to ascertain that their
transfers are in compliance with the terms of the applicable
Stockholders Agreement."
11. Addition of Article 10. The Stock Purchase Agreement shall
be amended by inserting the following Article 10 therein:
"ARTICLE 10
"Preemptive Right
"10.1 Preemptive Right. For so long as any shares of
Preferred Stock are outstanding, the Buyer shall have the
rights set forth in this Article 10 as if it was the holder of
record and beneficially of all such outstanding shares. The
rights set forth herein are in favor of the Buyer and its
successors and assigns, provided that any exercise procedures
to be accomplished hereunder shall be performed by the Buyer
or its nominee and no other person may accomplish such
procedures or seek to exercise the preemptive right set forth
in this Article 10. Absent an express assignment of the rights
of the Buyer under this Article 10, no transfer by the Buyer
of shares of Preferred Stock shall affect the rights of the
Buyer hereunder.
"The Buyer shall have, as if it were the holder of
each and every of the issued and outstanding shares of
Preferred Stock, at any time and from time to time the
preemptive right to purchase, in the case of the proposed
issuance by the Company of, or the proposed granting by the
Company of shares of, any class of the Company's stock
("Capital Stock"), or any rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for
Common Stock (including, without limitation, interests in the
Operating Partnership) (such rights or options being
hereinafter referred to as "Options" and such convertible or
exchangeable stock or securities being hereinafter referred to
as "Convertible Securities"). On each occasion that the
Company proposes to issue Capital Stock, Options or
Convertible Securities, or any of the foregoing, the Company
shall give to the
3
<PAGE> 4
Buyer prior written notice (the "Company Notice") of its
intention, by first class mail, postage prepaid, addressed at
its last address as shown by the records of the Company,
describing the same, the price and the specific terms (or in
the context of an offering of Capital Stock, Convertible
Securities or Options to the public, a range of price and
terms) upon which the Company proposes to issue the same. The
Buyer shall have fifteen (15) days from the date of the receipt
by the Buyer of the Company Notice to deliver a notice (the
"Rights Exercise Notice") notifying the Company of the Buyer's
intention to purchase all or a part of its pro rata share of
shares or other securities represented by Capital Stock,
Options or Convertible Securities, or any of the foregoing, in
accordance herewith, for the price and upon the terms specified
by the Company Notice, such pro rata share to be that number of
such shares or securities or Capital Stock, Options or
Convertible Securities, or any of the foregoing, as shall bear
the same proportion to the aggregate number of such shares or
securities or Capital Stock, Options or Convertible Securities,
or any of the foregoing, to be issued or sold as (i) the number
of shares of Common Stock as are issuable upon conversion of
the Preferred Stock issued and outstanding on the date of the
Company Notice bears to (ii) the sum of (A) the total number of
shares of Common Stock issued and outstanding on the date of
the Company Notice and (B) the number of shares of Common Stock
issuable upon conversion or exercise of the Preferred Stock and
any Convertible Securities or Options, or both, issued and
outstanding on the date of the Company Notice, and at a price
or prices no less favorable to the Buyer than the price or
prices at which such Capital Stock, Convertible Securities or
Options are proposed to be offered for sale to others,
provided, however, that the purchase of such Capital Stock,
Convertible Securities or Options shall be consummated prior to
the later of (x) thirty (30) days after the date of the Rights
Exercise Notice and (y) the date the Company consummates the
issuance of the Capital Stock, Convertible Securities or
Options described in the Company Notice. If, in connection with
any proposed issue of Capital Stock, Convertible Securities or
Options, the Buyer fails to exercise in full its preemptive
right as set forth in this Article 10 then, subject to the next
following sentence, the Company may sell the unsold Capital
Stock, Convertible Securities or Options at any time within 180
days (60 days in the case of a public offering) thereafter at a
price and upon terms no more favorable to the purchasers
thereof than specified in the Company Notice; provided, that
the Company shall not sell or grant, or permit conversion
under, any Capital Stock, Convertible Securities or Options, or
any of the foregoing, after such 180 - day period (or 60 - day
period in the case of a public offering) without renewed
compliance with this Section 10.1; provided, further, that in
the case of an underwritten public offering of Securities, if
in the opinion of the Company and the underwriter, such renewed
compliance by the Company with the procedural requirements
hereunder (i.e., timing of notices, etc.) would otherwise
impede the consummation of such public offering, the parties
agree to take such further action as may be reasonably
necessary to effectuate such offering while preserving Buyer's
substantive preemptive right hereunder.
4
<PAGE> 5
"10.2 Certain Exclusions. The provisions of this
Section 10 shall not apply to any shares of any class of the
Company's Capital Stock or Options or Convertible Securities,
or both (i) issuable upon conversion of any Preferred Stock;
(ii) issuable upon conversion of Convertible Securities or the
exercise of Options, or both, if the Buyer was offered the
opportunity to purchase such shares or securities, or
Convertible Securities or Options, or both, pursuant to this
Article 10, and declined the same, or as to which the Buyer
was not given such opportunity by reason of the application of
this Article 10; (iii) issuable in connection with stock
splits, stock dividends or recapitalizations as to the effects
of which adjustment will be made as provided elsewhere herein
or in the Articles Supplementary pertaining to the Preferred
Stock; or (iv) issuable to employees and prospective employees
pursuant to any plan or pattern of employee equity
participation or issuable in connection with the Company's
Dividend Reinvestment Plan.
"10.3 Adjustments Prior to the Defining Event.
Notwithstanding the foregoing, in the event the Company
delivers the Company Notice to the Buyer on a date prior to
the earliest to occur of (A) December 15, 1996, (B) the
Stockholder Approval Date, (C) the later of (x) the
Stockholder Rejection Date and (y) the IRS Approval Date (the
earliest to occur of (A), (B) and (C), above, shall
hereinafter be referred to as the "Defining Event"), the
following shall apply:
(i) subject to subsections (iv) and (v),
below, the Buyer shall have the preemptive right to
purchase all or part of its pro rata share of Capital
Stock, Options or Convertible Securities
(collectively, "Securities"), which pro rata share
shall equal such number of Securities which bears the
same proportion to the aggregate number of Securities
to be issued or sold as (a) the number of shares
issuable upon conversion of 800,000 shares of
Preferred Stock bears to (b) the sum of (I) the total
number of shares of Common Stock issued and
outstanding on the date of the Company Notice and
(II) the number of shares of Common Stock issuable
upon conversion of 800,000 shares of Preferred Stock
and any Convertible Securities or Options issued and
outstanding on the date of the Company Notice;
(ii) the Buyer's Rights Exercise Notice
must be delivered to the Company within fifteen (15)
days of receipt by the Buyer of the Company Notice;
(iii) the Buyer must consummate any
purchases hereunder on or prior to the later of (a)
forty-five (45) days after the Defining Event and (b)
the date the Company consummates the issuance of the
Securities specified in the Company Notice;
5
<PAGE> 6
(iv) if and to the extent that on the date
of or following the Defining Event, the Buyer is
prevented or prohibited from the exercise in full or
in part of its preemptive right to purchase any
Securities due to restrictions on the ownership by
the Buyer (or any group of holders with which such
the Buyer may be affiliated or may be deemed to be
affiliated) of any of such Securities, whether under
applicable Maryland law, provisions of the Company's
Charter, any Articles Supplementary thereto or
ByLaws, or by reason of restrictions applicable for
purposes of the Company's continued qualification as
a 'real estate investment trust' for purposes of the
Internal Revenue Code of 1986, as amended from time
to time (the "Exercise Restriction"), such number of
Securities required to be purchased pursuant to such
preemptive right shall automatically be reduced to
such amount as to not exceed the Exercise
Restriction.
(v) Provided further, notwithstanding
Section 10.3(i), in the event that, after the date of
the Defining Event, the Company issues Securities
(the date of such issuance, the "Issuance Date")
specified in the Company Notice applicable to such
securities and such Company Notice was dated a date
before the date of the Defining Event, the Buyer
shall have the preemptive right to purchase all or
part of its pro rata share of Securities which pro
rata share shall equal such number of Securities
which bears the same proportion to the aggregate
number of Securities sold on the Issuance Date as (a)
the number of shares issuable upon conversion of the
issued and outstanding Preferred Stock on the
Issuance Date bears to (b) the sum of (I) the total
number of shares of Common Stock issued and
outstanding on the Issuance Date and (II) the number
of shares of Common Stock issuable upon conversion of
the issued and outstanding Preferred Stock on the
Issuance Date and any other Securities issued and
outstanding on the Issuance Date."
12. Amendment to Section 9.2. Section 9.2 of the Stock
Purchase Agreement is hereby amended by deleting Section 9.2 in its entirety and
inserting in lieu thereof:
"(a) OTHER THAN WITH RESPECT TO THE
PROVISIONS OF ARTICLE 10, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF. ARTICLE 10 OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
WITHOUT REFERENCE TO THE CHOICE OF LAW PRINCIPLES
THEREOF. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE
JURISDICTION OF THE UNITED STATES DISTRICT COURT OR
OF ANY COURT OF THE STATE OF MARYLAND WHICH IS
LOCATED IN THE CITY BALTIMORE, MARYLAND, IN ANY
6
<PAGE> 7
ACTION, SUIT OR PROCEEDING BROUGHT AND RELATED TO OR
IN CONNECTION WITH THE RIGHTS AND OBLIGATIONS SET
FORTH IN ARTICLE 10 OF THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY ARTICLE 10 AND, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT,
ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH
COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF
THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THE RIGHTS AND OBLIGATIONS SET FORTH IN ARTICLE 10 OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO THEREIN OR
THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR
BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE COMPANY AGREES NOT TO SEEK AND HEREBY WAIVES
THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH
COURT BY ANY COURT OF ANY OTHER NATION OR
JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN
ENFORCEMENT OF SUCH JUDGMENT.
"(b) The parties to this Agreement agree to
use their best efforts to cause the provisions of
Section 9.2(a) to be observed.
"(c) The parties hereto knowingly,
voluntarily and expressly waive all right to trial by
jury in any action, proceeding or counterclaim
enforcing or defending any rights arising out of or
relating to this Agreement or the transactions
contemplated hereby. Each of the parties acknowledge
that the provisions of this Section 9.2(c) have been
bargained for and that it has been represented by
counsel in connection therewith."
13. Full Force and Effect. Except as specifically amended and
modified hereby, the Stock Purchase Agreement shall remain in full force and
effect and no party hereto waives any of its rights under the Stock Purchase
Agreement.
14. Counterparts. This Amendment may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other party. Copies of executed
counterparts have been signed by each party hereto and delivered to the other
party. Copies of executed counterparts transmitted by telecopy, telefax or other
electronic transmission service shall be considered original executed
counterparts for purposes of this Section, provided receipt of copies of such
counterparts is confirmed.
7
<PAGE> 8
15. Consequential Damages. In no event will either party be
liable to the other in contract, tort or otherwise for any consequential,
indirect, exemplary, incidental or special damages arising out of or relating to
this Amendment.
16. Entire Agreement. The Stock Purchase Agreement, as amended
hereby (including agreements incorporated herein or therein), and the Schedules
and Exhibits thereto contain the entire agreement between the parties with
respect to the subject matter hereof and thereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein or therein. This Amendment is not intended
to confer upon any person not a party hereto (and their successors and assigns)
any rights or remedies hereunder.
17. Successors and Assigns. Except as otherwise provided
herein, this Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
18. Headings. The Section headings contained in this Amendment
are inserted for convenience of reference only and will not affect the meaning
or interpretation of this Amendment.
19. Amendments and Waivers. This Amendment may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision hereof shall not be construed as a waiver of
any subsequent breach.
20. Absence of Presumption. This Amendment shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party, drafting or causing any instrument to be
drafted.
21. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions
hereof.
22. Further Assurances. The Company and Buyer agree that, from
time to time, each of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be necessary to carry
out the purposes and intents hereof.
23. Specific Performance. Buyer and the Company each
acknowledge that, in view of the uniqueness of the parties hereto, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Amendment were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
8
<PAGE> 9
24. Expenses. Whether or not any purchase of Preferred Stock
contemplated hereby is consummated, all reasonable legal and other costs and
expenses incurred in connection with this Amendment and the transactions
contemplated hereby shall be paid by the Company.
* * *
<PAGE> 10
IN WITNESS WHEREOF, the parties have duly executed, or have caused
their duly authorized officer or representative to execute, this Amendment No. 1
to Stock Purchase Agreement as of the date first above written.
TIGER/WESTBROOK REAL ESTATE FUND,
L.P., a Delaware limited partnership
<TABLE>
<CAPTION>
<S> <C>
By: Tiger/Westbrook Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Westbrook Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ W.H. Walton III
-------------------------------------------
William H. Walton III,
Managing Member
By: /s/ Paul D. Kazilionis
-------------------------------------------
Paul D. Kazilionis
Managing Member
</TABLE>
TIGER/WESTBROOK REAL ESTATE CO-INVESTMENT PARTNERSHIP,
L.P., a Delaware limited partnership
By: Tiger/Westbrook Real Estate Partners Management,
L.L.C., a Delaware limited liability company,
General Partner
By: Westbrook Real Estate Fund I, L.L.C., a
Delaware limited liability company,
Managing Member
By: /s/ W.H. Walton III
--------------------------------------------
William H. Walton III,
Managing Member
By: /s/ Paul D. Kazilionis
--------------------------------------------
Paul D. Kazilionis
Managing Member
9
<PAGE> 11
ESSEX PROPERTY TRUST, INC.
By: /s/ Michael Schall
------------------------------------------------------
Name: Michael Schall
---------------------------------------------
Title: CFO
--------------------------------------------
10
<PAGE> 1
LOAN FACILITY AGREEMENT
Dated as of June 20, 1996
among
ESSEX PROPERTY TRUST, INC., as Borrower
and
T/W ESSEX FUNDING, L.L.C., as Lender
<PAGE> 2
LOAN FACILITY AGREEMENT dated as of June 20, 1996, among Essex
Property Trust, Inc., a Maryland corporation (the "Borrower") and T/W Essex
Funding, L.L.C., a Delaware limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and certain affiliates of the Lender
(collectively, the "Buyer") have entered into a Stock Purchase Agreement dated
as of the date hereof (as the same may be amended, restated or supplemented from
time to time, the "Stock Purchase Agreement"), pursuant to which Buyer has
agreed to purchase up to 1,600,000 shares of convertible preferred stock of the
Borrower on the terms and subject to the conditions contained therein; and
WHEREAS, the terms of the Stock Purchase Agreement provide for
the execution and delivery of this Agreement simultaneously with the closing of
the initial transactions contemplated thereby;
NOW, THEREFORE, the Borrower and the Lender hereby agree as
follows:
ARTICLE 1
DEFINED TERMS
1.1 Definitions. Each term defined in this Section 1.1, when used in
this Agreement, has the meaning indicated below. Capitalized terms used herein
but not defined herein shall have the meanings given to them in the Stock
Purchase Agreement.
"Agreement" shall mean this Loan Agreement, as amended, restated,
modified or supplemented from time to time.
"Applicable Rate" shall mean the greater of (i) 8.75% per annum,
and (ii) the rate which is equal to the quarterly dividend on the Common Stock,
annualized, divided by $ 21.875.
"Appreciated Stock Price" shall mean (i) with respect to Loans
that are paid in full by the Borrower on or prior to December 31, 1996, the
average of the closing price (as reported in The Wall Street Journal, absent
manifest error) of Borrower's Common Stock for the twenty consecutive Business
Days immediately preceding, but not including, the earlier of the date of
payment or December 31, 1996, and (ii) with respect to Loans that are paid or
mature on February 28, 1997, or are paid or mature on April 30, 1997, as the
case may be, the average of the closing price (as reported in The Wall Street
Journal, absent manifest error) of Borrower's Common Stock for any twenty
consecutive Business Days, as selected by the Lender, from and including
December 1, 1996, through but not including the Option C Maturity Date.
"Business Day" shall mean any day on which both state and
federally chartered banks in New York, New York are required to be open for
general banking business.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
1
<PAGE> 3
"Dollars" or "$" shall mean the lawful currency of the United
States of America and, in relation to any amount to be advanced or paid
hereunder, funds having same day value.
"Event of Default" shall mean each of the events set forth in
Section 6.1 hereof.
"Exchange Price" shall have the meaning set forth in Section 2.11
hereof.
"Guarantee" shall mean the guarantee to be executed and delivered
by the Guarantor, substantially in the form of Exhibit B hereto.
"Guarantor" shall mean Essex Portfolio L.P., a California limited
partnership, of which the Borrower is the sole general partner.
"Indebtedness" shall mean for any person all indebtedness or
other obligations of such person for borrowed money and all indebtedness of such
person with respect to any other items (other than accounts payable in the
ordinary course of business, income taxes payable, deferred taxes and deferred
credits) which would, all in accordance with generally accepted accounting
principles, be classified as a liability on the balance sheet of such person.
"Initial Commitment" means $13,000,000.
"Initial Exchange Closing" shall have the meaning set forth in
Section 2.10 below.
"Judicial Prohibition Maturity Date" shall mean if a Judicial
Prohibition Maturity Event has occurred, notwithstanding any other provision of
this Agreement, December 31, 1996; provided, however, Borrower may, in its sole
discretion, by delivery of written notice of same to Lender on or prior to
December 20, 1996 (unless the applicable Judicial Prohibition Maturity Event
shall have occurred on or after December 20, 1996, in which case not later than
three Business Days after such occurrence but in no event later than December
30, 1996), extend the date for repayment of the Loans from the Judicial
Prohibition Maturity Date (assuming there exists a Judicial Prohibition Maturity
Event on such date and, if not, Lender and Buyer shall follow the procedures for
the appropriate Option, and there shall be no extension) to February 28, 1997;
and, provided, further, Borrower may also, in its sole discretion, by delivery
of written notice of same to Lender not later than February 20, 1997, further
extend such date to April 30, 1997.
"Judicial Prohibition Maturity Event" shall mean an event whereby
the Lender is estopped from the exercise of any Option otherwise available as a
result of judicial process other than as a result of an action or claim brought
by the Lender itself or by Buyer, or by any other person in collusion with the
Lender or Buyer, and such estoppel shall remain in effect until and including
December 30, 1996.
IRS Approval Date" shall mean the date of receipt by the
Borrower of a Private Letter Ruling from the Internal Revenue Service as
required by Article EIGHTH(a)(9) of the Articles of Amendment and Restatement of
the Borrower enabling the Borrower to exempt Lender's affiliates from the
Ownership Limit as defined in such Articles of Amendment and
2
<PAGE> 4
Restatement ("IRS Approval"), provided, however, such event shall have occurred,
if at all, on or prior to December 15, 1996.
"Loan" shall mean each loan to be made by the Lender to the
Borrower pursuant to Article II hereof.
"Note" shall mean a promissory note of the Borrower in registered
form payable to the order of the Lender evidencing the Loans, substantially in
the form of Exhibit A hereto, and any promissory note or notes issued in
substitution thereof.
"Notice of Occurrence" shall have the meaning set forth in
Section 2.10.
"Obligations" shall mean any and all of the debts, obligations
and liabilities of the Borrower provided for or arising under this Agreement,
whether now existing or hereafter arising, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, and whether or not
from time to time decreased or extinguished and later increased, created or
incurred.
"Option A" shall mean the Lender's obligation (absent the
existence of a Judicial Prohibition Maturity Event which is not discharged prior
to the Judicial Prohibition Maturity Date) (i) to exchange the Loan comprising
the Initial Commitment for Preferred Stock pursuant to Section 2.11 hereof, and
(ii) to utilize the funds otherwise comprising the Subsequent Commitment to
acquire Preferred Stock in accordance with the Stock Purchase Agreement, in each
case if the Stockholder Approval Date has occurred.
"Option B" shall mean the Lender's obligation (absent the
existence of a Judicial Prohibition Maturity Event which is not discharged prior
to the Judicial Prohibition Maturity Date) (i) to exchange the Loan comprising
the Initial Commitment for Preferred Stock pursuant to Section 2.11 hereof, and
(ii) to utilize the funds otherwise comprising the Subsequent Commitment to
acquire Preferred Stock in accordance with the Stock Purchase Agreement, in each
case if the IRS Approval Date shall have occurred prior to the Stockholder
Approval Date and the Stockholder Approval Date shall have occurred.
"Option C" shall mean (i) the Lender's option to exchange up to
$1,500,000 principal amount of the Loan comprising the Initial Commitment for
Preferred Stock pursuant to Section 2.11 hereof, and (ii) the automatic
reduction of the Subsequent Commitment to zero if, but only if, (x) (A) the IRS
Approval Date shall not have occurred on or before December 15, 1996, and (B)
the Stockholder Rejection Date shall have occurred, or (y) the Stock Purchase
Agreement shall be terminated for any reason or any material provision thereof
shall have ceased to be in full force and effect such that the Buyer under the
Stock Purchase Agreement shall not be able to realize the material benefits
thereof.
"Option D" shall mean (i) the Lender's obligation (absent the
existence of a Judicial Prohibition Maturity Event which is not discharged prior
to the Judicial Prohibition Maturity Date) to exchange the Loan comprising the
Initial Commitment for Preferred Stock pursuant to Section 2.11 hereof, (ii) the
Lender's option to exchange up to $6,000,000 in Loans comprising the Subsequent
Commitment for Preferred Stock pursuant to Section 2.11 hereof, and
3
<PAGE> 5
(iii) the automatic reduction of the balance of the Subsequent Commitment to
zero upon the Lender's exercise of, or failure to exercise, the option set forth
in (ii) above if, but only if, (x) the IRS Approval Date shall have occurred,
and (y) the Stockholder Rejection Date shall have occurred.
"Option A Event" shall mean the occurrence of the Stockholder
Approval Date provided that the IRS Approval Date shall not have first occurred.
"Option B Event" shall mean the occurrence of the Stockholder
Approval Date provided that the IRS Approval Date shall have first occurred.
"Option C Event" shall mean either (i) (A) the IRS Approval Date
shall not have occurred on or prior to December 15, 1996, and (B) the
Stockholder Rejection Date shall have occurred, or (ii) the Stock Purchase
Agreement shall have terminated for any reason or any material provision thereof
shall have ceased to be in full force and effect such that Buyer under the Stock
Purchase Agreement shall not be able to realize the material benefits thereof.
"Option D Event" shall mean the IRS Approval Date shall have
occurred and the Stockholder Rejection Date shall have occurred.
"Option A Maturity Date" shall mean the Stockholder Approval
Date.
"Option B Maturity Date" shall mean the Stockholder Approval
Date.
"Option C Maturity Date" shall mean (i) December 16, 1996, in
respect of that portion of the Loan which comprised part of the Initial
Commitment which is exchanged for Preferred Stock, if any (i.e., pursuant to
Option C, up to $1,500,000), and (ii) with respect to the balance of the Loan,
December 31, 1996; provided, however, if the Borrower shall have notified the
Lender on or before December 20, 1996, that it requests an extension, the Option
C Maturity Date shall be extended to February 28, 1997; and provided, further,
that if the Borrower shall have notified the Lender on or before February 20,
1997, that it requests another extension, the Option C Maturity Date shall be
further extended to April 30, 1997.
"Option D Maturity Date" shall mean (i) the Shareholder Rejection
Date if the IRS Approval Date precedes the Stockholder Rejection Date or (ii)
the IRS Approval Date if the Stockholder Rejection Date precedes the IRS
Approval Date.
"Options" shall mean each of Option A, Option B, Option C and
Option D, one of which shall be available in accordance with the definitions
thereof upon the conditions set forth therein.
"Organic Change" shall have the meaning set forth in Section 2.11
hereof.
"Register" shall meant the Note Register maintained by Borrower
or by Borrower's bank.
4
<PAGE> 6
"Related Document" shall mean any agreement, certificate or other
document executed by the parties hereto in connection with this Agreement.
"Stock Purchase Agreement" shall have the meaning set forth in
the first recital hereof.
"Stockholder Approval Date" shall mean the date, which shall be
on or prior to October 30, 1996, on which the stockholders of the Borrower have
duly approved all necessary amendments to the Company Charter in form and
substance satisfactory to the Lender and Buyer, permitting issuance to
Affiliates of the Lender on and after the Initial Closing Date of up to
1,600,000 shares of Preferred Stock and covering such other matters as the
Borrower, the Lender and Buyer mutually agree should be properly presented for
approval by the Borrower's stockholders.
"Stockholder Rejection Date" shall mean the earlier to occur of
(i) the date on which the stockholders of the Borrower have duly rejected any
necessary transaction contemplated by this Agreement and by the Stock Purchase
Agreement; and (ii) October 30, 1996.
"Subsequent Commitment" means initially $20,000,000, as such
amount may be reduced pursuant to Section 2.9 hereof by stock purchase or as
otherwise provided herein.
"TWREF" means Tiger/Westbrook Real Estate Fund, L.P., a Delaware
limited partnership.
ARTICLE 2
TERMS OF THE LOANS; FEES
2.1 The Loans. On the terms and subject to the conditions of this
Agreement, the Lender shall make Loans to the Borrower of (i) an amount equal to
the amount of the Initial Commitment on July 1, 1996, and (ii) in accordance
with the applicable Option, the Subsequent Commitment on the Option A Maturity
Date if an Option A Event has occurred, the Option B Maturity Event if an Option
B Event has occurred, or the Option D Maturity Date if an Option D Event has
occurred.
2.2 Disbursement of Loan Proceeds.
(a) The Lender shall make the Loan proceeds of the Initial
Commitment available to the Borrower by transferring the amount thereof by 12:00
noon (New York time) on July 1, 1996, and, in accordance with the applicable
Option, fifteen Business Days after the Lender's receipt of a notice from the
Borrower specifying the date and amount of each Loan representing all or any
part of the Subsequent Commitment, in the case of the Loans representing the
Subsequent Commitment, to a bank account held by the Borrower at the Borrower's
bank and for credit to the account so identified on the signature page hereto.
Upon the Lender's receipt of any such notice in respect of any Loan representing
the Subsequent Commitment, the Lender shall have the right either to make such
Loan or to have the Buyer purchase Preferred Stock under the Stock Purchase
Agreement. However, upon the applicable event that gives rise to any such
finding
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of the Subsequent Commitment as a Loan, the principal amount of such Loan shall
be deemed to be immediately exchanged into Preferred Stock.
(b) The Loan representing the Initial Commitment shall be made
by a single disbursement on July 1, 1996, and, in accordance with the applicable
Option, the Loans representing the Subsequent Commitment shall, in the case of
an Option A Event or an Option B Event, be made in no more than three
disbursements of not less than $5,000,000 per disbursement on any date from and
including the Stockholder Approval Date to June 20, 1997, and, in the case of an
Option D Event, be made in one disbursement on the Option D Maturity Date;
provided, however, that, in the case of Option A and Option B, the Borrower
shall be deemed to have requested, and the Lender shall fund, Loans comprising
the unutilized portion of the Subsequent Commitment on June 20, 1997.
(c) Notwithstanding the provisions of Section 2.1 hereof and
this Section 2.2, in the event that each of the Lender and Buyer have reviewed
and approved the certificate of limited partnership of the Guarantor, the
agreement of limited partnership of the Guarantor and any and all amendments to
any of the foregoing and are satisfied, in their sole discretion, with the
provisions thereof (including a provision that the ownership of a preferred
limited partnership interest Guarantor will not require any indirect investors
of Lender to treat any income allocated to it from Guarantor as unrelated
business taxable income under the Code), the Borrower will be permitted to
request the Lender to exchange, and the Lender will, upon receipt of such
request from the Borrower, exchange, the Loan representing the Initial
Commitment for limited partnership interests in the Guarantor on such terms as
the Lender and the Guarantor shall mutually agree (reflecting the economics
contemplated in the Stock Purchase Agreement).
2.3 Repayment of Principal. The Borrower shall not be permitted to
prepay any amounts outstanding hereunder at any time. The Borrower shall repay
the principal amount of the Loans on the Option A Maturity Date if an Option A
Event has occurred, the Option B Maturity Date if an Option B Event has
occurred, the Option C Maturity Date if an Option C Event has occurred, or the
Option D Maturity Date if an Option D Event has occurred (i) in Dollars, but
only if an Option C Event has occurred, and (ii) in Preferred Stock as provided
in Sections 2.10 and 2.11 hereof if an Option A Event, Option B Event or Option
D Event has occurred. The Borrower shall, notwithstanding the foregoing, repay
the principal amount of the Loans, in Dollars, on the Judicial Prohibition
Maturity Date if a Judicial Prohibition Maturity Event shall have been in
continuous effect since the occurrence of an Option A Event, Option B Event or
Option D Event, as the case may be, with result that any of Option A, Option B
or Option D, as applicable, shall not have been exercised on or prior to the
Judicial Prohibition Maturity Date.
2.4 Rate of Interest. The Borrower shall pay interest on the unpaid
principal amount of the Loans from and including the date of each Loan to but
not including the date on which such Loan is paid in full at the Applicable
Rate, which shall be calculated and paid as specified in the definition of
Applicable Rate. Notwithstanding the foregoing, if the Borrower shall fail to
pay when due (whether at scheduled maturity, on acceleration or otherwise) any
principal amount owing under this Agreement, the Borrower will pay interest on
the amount in default from the date of such default until paid at the rate
specified in Section 6.4 hereof. Notwithstanding any other
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provisions contained in this Agreement, neither the Applicable Rate nor any
dividends payable on any Preferred Stock shall begin to accrue until the date
Lender or Buyer, as the case may be, actually funds the amount to be funded for
the Loan or Preferred Stock related thereto.
2.5 Payment of Interest. Accrued interest on the Loans shall be
payable quarterly in arrears on the last day of each calendar quarter, and on
the Option A Maturity Date, Option B Maturity Date, Option C Maturity Date or
the Option D Maturity Date, as the case may be, except that default interest
shall be payable on demand.
2.6 Computation of Interest. Interest payable under this Agreement
shall be computed on the basis of a year of 360 days and twelve 30-day months.
2.7 Manner of Payments. Each payment by the Borrower under this
Agreement shall be made by transferring the amount thereof in Dollars (unless
otherwise specified in Section 2.03 hereof) to the Lender's bank account at the
Lender's bank and for credit to the account so identified on the signature page
hereto, not later than 1:00 p.m. (New York City time) on the date on which such
payment shall become due. Each such payment shall be made without set-off or
counterclaim and free and clear of, and without deduction for, any taxes,
duties, levies, imposts or other charges of a similar nature.
2.8 Extension of Payments. If any payment under this Agreement shall
become due on a day which is not a Business Day, the due date thereof shall be
extended to the next following day which is a Business Day, and such extension
shall be taken into account in computing the amount of any interest then due and
payable hereunder.
2.9 Reduction of the Subsequent Commitment. The Subsequent Commitment
shall be automatically reduced by (i) the principal amount of each Loan (other
than the Initial Commitment, which shall already have been exchanged in full for
Preferred Stock), and (ii) amounts expended by Buyer in any purchase of
Preferred Stock representing the Subsequent Commitment under the Stock Purchase
Agreement or, if applicable, in any acquisition of limited partnership interests
in the Guarantor, in each case after the Initial Closing Date, (ii) in the case
of an Option C Event or Option D Event, the Subsequent Commitment shall be
reduced as provided under Option C and Option D, respectively, and (iii) in the
event of the existence of a Judicial Prohibition Maturity Event on the Judicial
Prohibition Maturity Date, the amount of the then unutilized portion thereof.
2.10 Procedures for Option Events.
(a) Within two Business Days following the occurrence of an
Option A Event, Option B Event, Option C Event or Option D Event, Borrower shall
provide Lender written notice of such occurrence (the "Notice of Occurrence"),
such notice specifying the type of Option which has occurred. In the case of an
Option A Event or Option B Event, the closing whereby the Loan comprising the
Initial Commitment shall be exchanged for Preferred Stock shall be held on the
third Business Day following Lender's receipt of the Notice of Occurrence;
provided, however, the Loan shall be deemed exchanged as of the Option A
Maturity Date or the Option B Maturity Date, as the case may be. In the case of
an Option C Event, Lender shall deliver a written notice to Borrower within
three Business Days of Lender's receipt of the Notice of Occurrence, which
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<PAGE> 9
written notice shall specify Lender's election with respect to its option to
exchange up to $1,500,000 of the Loan which comprised part of the Initial
Commitment for Preferred Stock and shall specify the amount, if any, up to
$1,500,000 which Lender intends to exchange. The closing of such an exchange
shall take place on the second Business Day following the date Lender's written
notice is received by Borrower; provided, however, that up to $1,500,000
comprising the portion of the Initial Commitment shall be deemed exchanged as of
the date Lender makes such election. In the case of an Option D Event, Lender
shall deliver a written notice to Borrower within three Business Days of receipt
of the Notice of Occurrence which written notice shall specify Lender's election
with respect to the exchange of up to $6,000,000 of the Subsequent Commitment
for Preferred Stock. The closing of such an exchange of up to $6,000,000
together with the exchange of the Loan comprising the Initial Commitment shall
take place fifteen Business Days following the date Lender's written notice is
received by Borrower; provided, however, the Loan comprising the Initial
Commitment shall be deemed exchanged as of the Option D Maturity Date, and up to
$6,000,000 Loan comprising the portion of the Subsequent Commitment shall be
deemed exchanged as of the date Lender makes such election. Any such closing
pursuant to this Section 2.10(a) shall be referred to as an "Initial Exchange
Closing."
(b) In the case of Option A or Option B, each closing relating
to the funding of the Subsequent Commitment (or any portion thereof), and its
automatic exchange into Preferred Stock, shall be held fifteen Business Days
following Lender's receipt of a written notice from Buyer setting forth Buyer's
request for such an exchange and the principal amount of Loan to be exchanged
thereby. If any portion of the Subsequent Commitment remains as of June 20,
1997, the Loan, borrowing and exchange with respect to such amount shall be held
on June 20, 1997. Each such closing pursuant to this Section 2.10(b) shall be
referred to as a "Subsequent Closing," and the date of any such Subsequent
Closing shall be referred to as a "Subsequent Closing Date."
(c) All closings relating to the foregoing shall be held on
such date specified in this Section 2.10 at the Palo Alto offices of Morrison &
Foerster or such other date and place as the parties mutually agree.
2.11 Exchange; Construction. References to exchanges of Loans for
Preferred Stock shall refer to exchanges of the outstanding principal amount of
the Loans (but not any accrued and unpaid interest thereon) for fully paid and
nonassessable shares of Preferred Stock. Exchange of the Loans for Preferred
Stock shall be at a price (the "Exchange Price") of $25 per share. If the
Borrower at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Preferred Stock into a
greater number of shares, the corresponding Exchange Price in effect immediately
prior to such subdivision shall be proportionately reduced, and if the Borrower
at any time combines (by reverse stock split or otherwise) its outstanding
shares of Preferred Stock into a smaller number of shares, the corresponding
Exchange Price in effect immediately prior to such combination shall be
proportionately increased. Lender may cause an exchange to occur in its name or
in the name of its nominee, including Buyer.
Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
to another person or other transaction which is effected in such a manner that
holders of Preferred Stock are entitled to receive (either directly or
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<PAGE> 10
upon subsequent liquidation) stock, securities or assets with respect to, in
exchange for or upon conversion of Preferred Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the Borrower
shall make appropriate provisions (in form and substance reasonably satisfactory
to the Lender) to insure that the Lender shall thereafter have the right to
acquire and receive, in lieu of or in addition to (as the case may be) the
shares of Preferred Stock immediately theretofore acquirable and receivable upon
the exchange of the Loan, such shares of stock, securities or assets as the
Lender would have received in connection with such Organic Change if the Lender
had exchanged the Loan or converted the Preferred Stock issuable upon exchange
of the Loans immediately prior to such Organic Change. In each such case, the
Borrower shall also make appropriate provisions (in form and substance
reasonably satisfactory to the Lender) to insure that the provisions of this
paragraph and the immediately preceding paragraph shall thereafter be applicable
to the Loans. The Borrower shall not effect any such Organic Change unless,
prior to the consummation thereof, the successor corporation (if other than the
Borrower) resulting from such Organic Change or the corporation purchasing
assets in such Organic Change assumes by written instrument (in form reasonably
satisfactory to the Lender) the obligation to deliver to the Lender such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
the Lender may be entitled to acquire.
Each Loan shall be exchangeable by the Lender to the extent set
forth above and upon the occurrence of any event which requires or permits the
Lender to exchange loans under the Initial Commitment and/or the Subsequent
Commitment for Preferred Stock, and, upon the occurrence of any such event, the
rights of the Lender as Lender in respect of each exchanged Loan shall cease,
and the Buyer (or such other nominee as Lender shall utilize) shall thereafter
be treated for all purposes as the record holder of the equivalent amount of
Preferred Stock at such time. At each closing described above, the Borrower
shall issue and shall deliver at such office or at such other address requested
by the Lender a certificate or certificates in blank or in such name as Lender
shall direct for the number of full and fractional shares of Preferred Stock
issuable upon exchange and Lender hereby consents to all such shares of
Preferred Stock being issued and delivered.
The issuance of certificates for shares of Preferred Stock upon
exchange of each Loan shall be made without charge to the Lender or to Buyer for
any issuance tax in respect thereof or other cost incurred by the Borrower in
connection with such exchange and the related issuance of shares of Preferred
Stock. Upon exchange of each Loan, the Borrower shall take all such actions as
are necessary in order to insure that the Preferred Stock issuable with respect
to such conversion shall be validly issued, fully paid and nonassessable.
The Borrower's obligations on the Option A Maturity Date, the
Option B Maturity Date, the Option C Maturity Date or the Option D Maturity
Date, as the case may be, shall be governed by the terms of the Stock Purchase
Agreement as if such exchange were a purchase and sale of Preferred Stock
thereunder.
2.12 Use of Proceeds. The Borrower shall use the proceeds of each
Loan for lending to the Guarantor to acquire properties and to reduce
outstanding Indebtedness of the Guarantor.
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2.13 Fees. In the event that the Stockholder Rejection Date shall
have occurred, the Borrower shall pay to the Lender a prepayment fee on such
Stockholder Rejection Date equal to the product of (i) the Appreciated Stock
Price minus $21.875 times (ii) a fraction, the numerator of which is the amount
of Loans outstanding on such date and the denominator of which is $21.875.
ARTICLE 3
CONDITIONS PRECEDENT
3.1 Conditions. As conditions precedent to the Lender's obligation
to make the initial Loan, the Lender shall have received (i) the Note and a
counterpart of this Agreement, each duly executed by the Borrower, (ii) the
Guarantee, duly executed by the Guarantor, (iii) all other documents that are
required to be delivered by the Borrower pursuant to Articles 2 and 7 of the
Stock Purchase Agreement on or prior to the Initial Closing and evidence
reasonably satisfactory to the Lender that all other conditions precedent to
such Initial Closing have been met. As conditions precedent to the Lender's
obligation to make each Loan (including the initial Loan), (i) no Event of
Default or event which, with the giving of notice or lapse of time or both,
shall have occurred and be continuing or shall result from the making of such
Loan, (ii) there shall not have been a failure of a representation or warranty
incorporated by reference herein to be true when made and where such failure
would have or could reasonably be expected to have had a Material Adverse
Effect, and (iii) the Stock Purchase Agreement shall not have terminated for any
reason nor shall any material provision thereof have ceased to be in full force
and effect other than by the mutual consent of the parties to the Stock Purchase
Agreement such that the TWREF under the Stock Purchase Agreement shall not be
able to realize the material benefits thereof. In the case of Option A and
Option B, as a condition precedent to the Lender's obligation to make any Loan
in respect of a Subsequent Commitment, since March 31, 1996, there shall not
have been any change, circumstance or event which has or could reasonably be
expected to have a Material Adverse Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties. The Borrower repeats and
restates all of the representations and warranties set forth in Article 3 of the
Stock Purchase Agreement for the benefit of Lender, all of which are deemed to
be incorporated by reference into this Agreement as if such representations and
warranties were set forth in full herein.
ARTICLE 5
COVENANTS
5.1 Covenants. For so long as any of the Obligations shall be
outstanding hereunder, the Borrower covenants and agrees as follows:
(a) If the Lender or TWREF has a reasonable basis to believe
that a Material Adverse Effect has occurred, each of the Lender and TWREF may
conduct audits of income and
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expenses to verify the amounts of such items as stated in any financial
statements, reports or projections furnished to Lender and TWREF under this
Agreement or any Related Document at the Lender's expense. The Borrower will
keep adequate records and books of account with respect to each of the
Properties, in which proper entries, reflecting all of the financial
transactions with respect to such Properties, are made in accordance with
generally accepted accounting principles applied on a consistent basis.
(b) The Borrower shall take such actions as are reasonably
necessary or as are reasonably requested by the Lender or TWREF to afford the
Lender and TWREF the following rights, and hereby authorizes Lender and TWREF to
take such actions as are reasonably necessary to accomplish such rights:
(i) The right routinely to consult with and advise
the management of the Borrower regarding
significant business activities and business and
financial developments of the Borrower, as well
as to communicate directly with the Borrower's
independent certified public accountants and tax
advisors. The Borrower hereby authorizes those
advisors of the Borrower to disclose to the
Lender and TWREF any and all financial
statements, other supporting financial documents
and schedules, including copies of auditor
response letters and management letters with
respect to the business, financial condition and
other affairs of the Borrower. Borrower will
deliver authorizing letters to its advisors
confirming the above.
(ii) The right to examine the books and records of the
Borrower at any time upon reasonable notice, and,
at Lender's or TWREF's expense, to conduct audits
of income and expenses to verify the amounts of
such items as stated in any financial statements
or reports furnished to Lender and TWREF under
this Agreement or any related documents.
(iii) The right to receive quarterly unaudited and
yearly audited financial reports, including
balance sheets, statements of income,
shareholders' equity and cash flow, a management
report, schedules of outstanding indebtedness and
a monthly report displaying by property gross
income, net operating income, cash flow and, on
an aggregate basis, FFO and Adjusted FFO per
share, and copies of all filings with the
Securities and Exchange Commission promptly when
same have been filed.
In addition, by virtue of TWREF's representation on the several committees of
the Borrower (including the Executive Committee and the Audit Committee) and the
Board of Directors of the Borrower, as provided in or by reference in the Stock
Purchase Agreement, Lender and TWREF will be consulted and given an opportunity
to advise Borrower (and such committees and the
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Board) as to financing matters, property acquisitions and dispositions and
operating budget and capital expenditure matters.
(c) In addition to the foregoing, the Borrower agrees that all
of the covenants set forth in Articles 5 and 6 of the Stock Purchase Agreement
are incorporated by reference into this Agreement as if such affirmative
covenants were set forth in full herein and agrees to comply with all such
covenants.
ARTICLE 6
EVENTS OF DEFAULT
6.1 Events of Default. If any one or more of the following events (an
"Event of Default") shall occur and be continuing, the Lender shall be entitled
to exercise the remedies set forth in Section 6.2 hereof:
(a) Failure of the Borrower to pay when due (i) the principal
of or interest on the Loan or (ii) any other amount payable hereunder if the
failure to pay any such amount continues for five Business Days after receipt of
notice thereof; or
(b) Default in the performance of any material covenant or
obligation contained or incorporated by reference herein or in the Stock
Purchase Agreement or any document or instrument delivered hereunder or
thereunder if the failure to perform such covenant continues for 15 Business
Days after receipt of notice thereof; provided, however, that Borrower shall
have a reasonable time to cure same if such cure cannot reasonably be
accomplished in 15 Business Days but is being diligently pursued; or
(c) The entry of a decree or order for relief in respect of
the Borrower by a court having jurisdiction in the premises in an involuntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Borrower or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; or
(d) The commencement by the Borrower of a voluntary case under
the Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency or other similar law, or the
consent by it to the entry of an order for relief in an involuntary case under
any such law or the consent by it to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Borrower or of any substantial part of its property, or
the making by it of a general assignment for the benefit of creditors, or the
failure of the Borrower generally to pay its debts as such debts become due or
the taking of any corporate action in furtherance of any of the foregoing; or
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(e) Any of the assets of the Borrower shall be attached for
execution or become subject to the order of any court or any other process for
execution and attachment and such attachment, order or process shall remain in
effect and undischarged for 60 days.
6.2 Default Remedies. If any Event of Default shall occur and be
continuing, then and in every such event, and at any time thereafter during the
continuance of such Event of Default the Lender may (i) terminate the Initial
Commitment and the Subsequent Commitment, and (ii) declare the Loans to be
forthwith due and payable, whereupon the Loans shall become forthwith due and
payable both as to principal and interest together with all other amounts
payable by the Borrower under this Agreement which may be due or accrued and
unpaid, in each case without presentment, demand, protest or any other notice of
any kind, all of which are expressly waived.
6.3 Set-Off. The Lender is hereby authorized at any time and from
time to time, upon the occurrence and during the continuance of any Event of
Default, without prior notice to the Borrower, to the fullest extent permitted
by law, to set off and apply any and all balances, credits, deposits (general or
special, time or demand, provisional or final), accounts or monies at any time
held and other indebtedness at any time owing by the Lender to or for the
account of the Borrower against any and all of the amounts owing by the Borrower
under this Agreement whether or not the Lender shall have made any demand
hereunder or thereunder.
6.4 Default Interest. If the Borrower shall fail to pay when due any
amount owing to the Lender under this Agreement, then to the extent permitted by
law the Borrower will pay to the Lender on demand interest on the amount in
default from the date such payment became due until payment in full at a rate
equal to the sum of the amount due under Section 2.4 of this Agreement plus 4%
per annum.
ARTICLE 7
GENERAL PROVISIONS
7.1 Expenses; Indemnification The Borrower agrees to pay all
reasonable out-of-pocket costs and expenses, including the reasonable fees and
disbursements of counsel, incurred by the Lender in connection with the
preparation, execution and delivery of this Agreement and the Related Documents,
and any amendments and waivers hereof or thereof. The Borrower agrees to pay any
reasonable legal or other expenses incurred by the Lender in connection with
investigating, defending or participating in any loss, claim, damage, liability
or other proceeding in connection with the enforcement of this Agreement or any
of the Related Documents and the collection of any amounts owing hereunder or
thereunder; provided that the Borrower shall not be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the Lender or its Affiliates or any of their respective agents or
employees.
7.2 Cumulative Rights; No Waiver. The rights, powers and remedies of
the Lender hereunder are cumulative and in addition to all rights, powers and
remedies provided under any and all agreements between the Borrower and the
Lender, at law, in equity or otherwise. Neither any delay nor any omission by
the Lender to exercise any right, power or remedy shall operate as a
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waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or any exercise of any other right, power or
remedy.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided receipt of copies of such counterparts is confirmed.
7.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED
IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT
AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THE BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR ANY DOCUMENT
OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
BORROWER AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE
JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE BORROWER
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD
AUTHORIZED BY THE LAWS OF NEW YORK.
7.5 Entire Agreement. This Agreement (including agreements
incorporated herein), the Schedule and the Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. This Agreement is
not intended to confer upon any person not a party hereto (and their successors
and assigns) any rights or remedies hereunder.
7.6 Notices. All notices and other communications hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic
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transmission service to the appropriate address or number as set forth below.
Notices to the Borrower shall be addressed to:
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
Attn: Keith Guericke
with a copy to:
Michael Schall
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
and another copy to:
Jordan Ritter
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
Notices to the Lender shall be addressed to:
Patrick K. Fox
General Counsel
Westbrook Partners, L.L.C.
14400 North Dallas Parkway, #200
Dallas, Texas 75240
with a copy to:
Keith Gelb
Vice President
Westbrook Partners, L.L.C.
11150 Santa Monica Boulevard
Los Angeles, California 90023
and another copy to:
Allen Curtis Greer, II
Rogers & Wells
200 Park Avenue
New York, New York 10166
or at such other address and to the attention of such other person as either
party may designate by written notice to the other party delivered in accordance
with this Section.
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7.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Except as specifically provided by the Stock Purchase Agreement, the
Borrower shall not be permitted to assign any of its rights hereunder to any
third party, other than to one or more Affiliates of the Borrower of which the
Borrower, directly or indirectly, beneficially owns 98% or more of the voting
power and the economic interests, provided that such Affiliates agree to be
bound hereby , and provided that the Borrower shall remain liable hereunder, and
provided that any bona fide financial institution to which the Borrower or any
permitted transferee has transferred (including upon foreclosure of a pledge)
shares of Company Stock for the purpose of securing bona fide indebtedness of
the Borrower shall also be entitled to enforce the rights of the Borrower
hereunder. The Lender may assign, or grant participations in, all or any part of
its rights and interests herein and in the Note to any Person without the
consent of, or notice of, the Borrower.
7.8 Headings. The Section, Article and other headings contained in
this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
7.9 Amendments and Waivers. This Agreement may not be modified or
amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision hereof shall not be construed as a waiver of
any subsequent breach.
7.10 Interpretation; Absence of Presumption. (a) For the purposes
hereof, (i) words in the singular shall be held to include the plural and vice
versa and words of one gender shall be held to include the other gender as the
context requires, (ii) the terms "hereof," "herein," and "herewith" and words of
similar import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole (including all of the Exhibits hereto) and not to any
particular provision of this Agreement, and Article, Section, paragraph and
Exhibit references are to the Articles, Sections, paragraphs and Exhibit to this
Agreement unless otherwise specified, (iii) the word "including" and words of
similar import when used in this Agreement shall mean "including, without
limitation," unless the context otherwise requires or unless otherwise
specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall
apply, when appropriate, to successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the party,
drafting or causing any instrument to be drafted.
7.11 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
7.12 Further Assurances. The Borrower agrees that, from time to
time, it will take such action as may reasonably be necessary to carry out the
purposes and intents hereof.
16
<PAGE> 18
7.13 Waiver of Jury Trial. The parties hereto knowingly, voluntarily
and expressly waive all right to trial by jury in any action, proceeding or
counterclaim enforcing or defending any rights arising out of or relating to
this Agreement or the transactions contemplated hereby. Each of the Borrower and
the Lender acknowledges that the provisions of this Section 7.13 have been
bargained for and that it has been represented by counsel in connection
therewith.
7.14 Maximum Interest Rate. In no event shall the rate of any
interest or fee exceed the maximum rate permissible for corporate borrowers by
applicable law (the "Maximum Rate"). If, in any month, any rate for any such
interest or fee, absent such limitation, would have exceeded the Maximum Rate,
then the rate for that month shall be the Maximum Rate, and, if in future
months, that interest rate would otherwise be less than the Maximum Rate, then
that interest rate shall remain at the Maximum Rate until such time as the
amount of interest paid hereunder equals the amounts which would have been paid
if the same had not been limited by the Maximum Rate. In the event that, upon
payment in full of the Obligations, the total amount of interest and fees paid
or accrued under the terms of this Agreement is less than the total amount of
interest which would have been paid or accrued if the rates set forth in this
Agreement had at all times been in effect, then the Borrower agrees, to the
extent permitted by applicable law, to pay to the Lender an amount equal to the
difference between (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect, and (ii) the
amount of interest and fees which would have accrued had the rates set forth in
this Agreement, at all times, been in effect, and (b) the amount of interest and
fees actually paid or accrued under this Agreement (up to the maximum amount of
such shortfall). In addition to the foregoing provisions of this Section 7.14,
the Borrower agrees that in the event the rate of interest or fees hereunder (to
the extent that such fees are or are deemed by a court of competent jurisdiction
to be a payment for the use of money) exceeds the Maximum Rate at any time of
determination, the Lender shall have the right, but not the obligation, to the
extent permitted by applicable law, to apply such excess retroactively in
respect of interest or such fees such that the rate of interest or such fees
hereunder is less than the Maximum Rate at such time.
7.15 Note Register. The Note or Notes are issued in registered form
only and the Lender shall maintain or cause to be maintained the Note Register.
17
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the date first above written.
LENDER: BORROWER:
T/W ESSEX FUNDING, L.L.C., ESSEX PROPERTY TRUST, INC.,
a limited liability company a Maryland corporation
By: ESSEX/TW FUNDING CORP., By: /s/ Jordan E. Ritter
as Managing member ---------------------------------
Name: Jordan E. Ritter
-------------------------------
Title: Vice President
------------------------------
By: /s/ Jeffrey M. Kaplan
-------------------------------
Name: Jeffrey M. Kaplan
--------------------------
Title: Vice President
-------------------------
By: /s/ Patricia K. Fox
-------------------------------
Name: Patricia K. Fox
--------------------------
Title: Secretary
-------------------------
Lender Bank: Borrower Bank:
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
- --------------------------------------- ------------------------------------
Acct. No.: Acct. No.:
----------------------------- --------------------------
Call Advice: Call Advice:
--------------------------- ------------------------
Telephone: Telephone:
----------------------------- --------------------------
Facsimile: Facsimile:
----------------------------- --------------------------
NOTE REGISTER
NOTE HOLDER PRINCIPAL AMOUNT
- --------------------------------------------------------------------------------
R-1 T/W Essex Funding, L.L.C. $33,000,000
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
18
<PAGE> 1
AMENDMENT NO. 1 TO LOAN FACILITY AGREEMENT
THIS AMENDMENT NO. 1 TO LOAN FACILITY AGREEMENT ("Amendment"), dated as
of July 1, 1996, is made by and between Essex Property Trust, Inc., a Maryland
corporation (the "Borrower"), and T/W Essex Funding, L.L.C., a Delaware limited
liability company (the "Lender").
RECITALS:
WHEREAS, the Lender and the Borrower entered into that certain Loan
Facility Agreement, dated as of June 20, 1996 (the "Loan Agreement"), whereby
the Lender agreed to lend to the Company and the Company agreed to borrow from
the Lender up to an aggregate of $33,000,000;
WHEREAS, the Borrower and certain affiliates of the Lender (such
affiliates, collectively, the "Buyer") entered into that certain Stock Purchase
Agreement, dated as of June 20, 1996, as amended to the date hereof (as so
amended, the "Stock Purchase Agreement"), whereby, subject to certain
conditions, the Borrower has agreed to sell to the Buyer and the Buyer has
agreed to purchase from the Borrower an aggregate of up to 1,600,000 shares of a
newly authorized series of preferred stock of the Borrower designated as 8.75%
Convertible Preferred Stock, Series 1996A (the "Preferred Stock"), having the
terms set forth in the form of Borrower's Articles Supplementary attached as
Exhibit A thereto (the "Articles Supplementary") establishing the rights,
privileges and preferences of the Preferred Stock, at a price of $25.00 per
share;
WHEREAS, the parties hereto desire, among other things, to reduce the
amount available under the Loan Agreement to $31,500,000;
WHEREAS, the Buyer and the Borrower have agreed, among other things, to
enter into Amendment No. 1 to the Stock Purchase Agreement dated as of June 20,
1996; and
WHEREAS, the parties hereto have agreed, among other things, to amend
and modify the Loan Agreement as set forth herein.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing premises and
covenants hereinafter set forth, and other good and valuable consideration had
and received, the parties hereto, upon the terms and subject to the conditions
contained herein, hereby agree as follows:
1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein which is defined in the Loan Agreement has
the meaning ascribed to such term in the Loan Agreement. Each reference to
"hereof," "hereunder," "herein" and "hereby" and
1
<PAGE> 2
each other similar reference contained in the Loan Agreement shall from and
after the date hereof refer to the Loan Agreement as amended hereby.
2. Amendment to Definitions. (a) The preamble to Section 1.1
shall be amended by adding "All references in this Agreement to any other
agreement or instrument shall include such other agreement or instrument as the
same may be amended, modified, reaffirmed or supplemented from time to time in
accordance with the terms thereof." immediately following the first sentence
thereof."
(b) The definition of "Initial Commitment" in the Loan
Agreement shall be amended by restating it in its entirety as follows: "'Initial
Commitment' means $11,500,000."
(c) The definition of "Option C" in the Loan Agreement
shall be amended by deleting the words "(i) the Lender's option to exchange up
to $1,500,000 principal amount of the Loan comprising the Initial Commitment for
Preferred Stock pursuant to Section 2.11 hereof, and (ii) "in the first through
third lines thereof.
(d) The definition of "Option D" in the Loan Agreement
shall be amended by deleting the term "$6,000,000" in the fourth line thereof
and inserting the term "$7,000,000" in its place and stead.
(e) The definition of "Option C Maturity Date" shall be
amended by restating it in its entirety as follows:
"'Option C Maturity Date' shall mean December 31, 1996;
provided, however, if the Borrower shall have notified the Lender on or
before December 20, 1996, that it requests an extension, the Option C
Maturity Date shall be extended to February 28, 1997; and provided,
further, that if the Borrower shall have notified the Lender on or
before February 20, 1997, that it requests another extension, the
Option C Maturity Date shall be further extended to April 30, 1997."
3. Amendment to Section 2.10(a). Section 2.10(a) of the
Loan Agreement shall be amended by restating it in its entirety as follows:
"2.10(a) Procedures for Option Events. Within two Business
Days following the occurrence of an Option A Event, Option B Event,
Option C Event or Option D Event, Borrower shall provide Lender written
notice of such occurrence (the "Notice of Occurrence"), such notice
specifying the type of Option which has occurred. In the case of an
Option A Event or Option B Event, the closing whereby the Loan
comprising the Initial Commitment shall be exchanged for Preferred
Stock shall be held on the third Business Day following Lender's
receipt of the Notice of Occurrence; provided, however, the Loan shall
be deemed exchanged as of the Option A Maturity Date or the Option B
Maturity Date, as the case may be. In the case of an Option D Event,
Lender shall deliver a written notice to Borrower within three Business
Days of receipt of the Notice of Occurrence which written notice shall
specify Lender's election with respect to the
2
<PAGE> 3
exchange of up to $7,000,000 of the Subsequent Commitment for Preferred
Stock. The closing of such an exchange of up to $7,000,000 together
with the exchange of the Loan comprising the Initial Commitment shall
take place fifteen Business Days following the date Lender's written
notice is received by Borrower; provided, however, the Loan comprising
the Initial Commitment shall be deemed exchanged as of the Option D
Maturity Date, and up to $7,000,000 Loan comprising the portion of the
Subsequent Commitment shall be deemed exchanged as of the date Lender
makes such election. Any such closing pursuant to this Section 2.10(a)
shall be referred to as an 'Initial Exchange Closing'."
4. Amendment to Section 2.11. Section 2.11 of the Loan
Agreement shall be amended by deleting the words "the Option C Maturity Date" in
the second line of the last paragraph thereof.
5. Amendment to Note Register and Replacement of Note. The
Note Register on page 18 of the Loan Agreement shall be amended by deleting
"$33,000,000" in the Principal Amount column and inserting in lieu thereof
"$31,500,000." The Borrower has executed and delivered a Note in the principal
amount of $31,500,000, but otherwise identical to the Note previously executed,
and the Lender will, on the receipt of same at closing proceedings in New York
City, cancel and surrender to the Borrower the Note reflecting a principal
amount of $33,000,000.
6. Full Force and Effect. Except as specifically amended and
modified hereby, the Loan Agreement shall remain in full force and effect and no
party hereto waives any of its rights under the Loan Agreement.
7. Expenses; Indemnification. The Borrower agrees to pay all
reasonable out-of-pocket costs and expenses, including the reasonable fees and
disbursements of counsel, incurred by the Lender in connection with the
preparation, execution and delivery of this Amendment and any amendments and
waivers hereof. The Borrower agrees to pay any reasonable legal or other
expenses incurred by the Lender in connection with investigating, defending or
participating in any loss, claim, damage, liability or other proceeding in
connection with the enforcement of this Amendment and the collection of any
amounts owing hereunder or thereunder; provided that the Borrower shall not be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Lender or its Affiliates or any of their
respective agents or employees.
8. Cumulative Rights; No Waiver. The rights, powers and
remedies of the Lender hereunder are cumulative and in addition to all rights,
powers and remedies provided under any and all agreements between the Borrower
and the Lender, at law, in equity or otherwise. Neither any delay nor any
omission by the Lender to exercise any right, power or remedy shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or any exercise of any other right, power or
remedy.
9. Counterparts. This Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become
3
<PAGE> 4
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party. Copies of executed counterparts transmitted by
telecopy, telefax or other electronic transmission service shall be considered
original executed counterparts for purposes of this Section, provided receipt of
copies of such counterparts is confirmed.
10. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THE BORROWER HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW
OF THE JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR
JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT.
THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS AMENDMENT OR ANY
METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
11. Entire Agreement. The Loan Agreement, as amended hereby
(including agreements incorporated herein), the Schedule and the Exhibits
thereto contain the entire agreement between the parties with respect to the
subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein. This Amendment is not intended to confer upon any person not
a party hereto (and their successors and assigns) any rights or remedies
hereunder.
12. Successors and Assigns. The Loan Agreement, as amended
hereby, shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns. Except as specifically provided by the
Stock Purchase Agreement, the Borrower shall not be permitted to assign any of
its rights hereunder to any third party, other than to one or more Affiliates of
the Borrower of which the Borrower, directly or indirectly, beneficially owns
98% or more of the voting power and the economic interests, provided that such
Affiliates agree to be bound hereby, and provided that the Borrower shall remain
liable hereunder, and provided that any bona fide financial institution to which
the Borrower or any permitted transferee has
4
<PAGE> 5
transferred (including upon foreclosure of a pledge) shares of capital stock for
the purpose of securing bona fide indebtedness of the Borrower shall also be
entitled to enforce the rights of the Borrower hereunder. The Lender may assign,
or grant participations in, all or any part of its rights and interests herein
and in the Note to any Person without the consent of or notice of the Borrower.
13. Headings. The Section headings contained in this Amendment
are inserted for convenience of reference only and will not affect the meaning
or interpretation of this Amendment.
14. Amendments and Waivers. This Amendment may not be modified
or amended except by an instrument or instruments in writing signed by the party
against whom enforcement of any such modification or amendment is sought. Either
party hereto may, only by an instrument in writing, waive compliance by the
other party hereto with any term or provision hereof on the part of such other
party hereto to be performed or complied with. The waiver by any party hereto of
a breach of any term or provision hereof shall not be construed as a waiver of
any subsequent breach.
15. Interpretation; Absence of Presumption. This Amendment
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party, drafting or causing any
instrument to be drafted.
16. Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
17. Further Assurances. The Borrower agrees that, from time to
time, it will take such action as may reasonably be necessary to carry out the
purposes and intents hereof.
18. Waiver of Jury Trial. The parties hereto knowingly,
voluntarily and expressly waive all right to trial by jury in any action,
proceeding or counterclaim enforcing or defending any rights arising out of or
relating to this Amendment or the transactions contemplated hereby. Each of the
Borrower and the Lender acknowledges that the provisions of this Section have
been bargained for and that it has been represented by counsel in connection
therewith.
* * *
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed on the date first above written.
LENDER: BORROWER:
T/W ESSEX FUNDING, L.L.C., ESSEX PROPERTY TRUST, INC., a
a Delaware limited liability company Maryland corporation
By: ESSEX/TW FUNDING CORP., as
Managing Member By: /s/ Michael Schall
---------------------------------
Name: Michael Schall
--------------------------
Title: CFO
-------------------------
By: /s/ Jeffrey M. Kaplan
-----------------------------
Name: Jeffrey M. Kaplan
----------------------
Title: Vice President
---------------------
6
<PAGE> 1
GUARANTEE
GUARANTEE, dated as of June 20, 1996 (the "Guarantee"), from ESSEX
PORTFOLIO L.P., a California limited partnership (the "Guarantor"), to T/W ESSEX
FUNDING, L.L.C., a Delaware limited liability company (the "Lender").
W I T N E S S E T H:
WHEREAS, the Guarantor wishes to induce the Lender to enter into a Loan
Facility Agreement (as amended, modified or supplemented from time to time, the
"Loan Agreement") with Essex Property Trust, Inc. (the "Borrower");
WHEREAS, the Borrower is the general partner of the Guarantor; and
WHEREAS, the proceeds of the loan made under such Loan Agreement will
be used by such Borrower to lend to the Guarantor to acquire certain properties
and to reduce certain outstanding indebtedness of the Guarantor; and
WHEREAS, the Lender is unwilling to enter into the Loan Agreement
unless the Guarantor enters into this Guarantee;
NOW, THEREFORE, in order to induce the Lender to enter into the Loan
Agreement and the transactions contemplated thereby, the Guarantor hereby agrees
as follows:
1. Guarantee.
(a) The Guarantor unconditionally and irrevocably guarantees to the
Lender the due and punctual performance of and compliance by the Borrower of its
obligations, covenants and undertakings contained in or arising under the Loan
Agreement, including but not limited to, the full and punctual payment by the
Borrower, and the indefeasible receipt by the Lender thereof, when due, whether
at the stated due date, by acceleration or otherwise, of any and all
obligations, liabilities, indebtedness and other amounts of every kind arising
out of the Loan Agreement and all amounts in respect of indemnities payable by
the Borrower under the Loan Agreement, howsoever created, arising or evidenced,
voluntary or involuntary, whether direct or indirect, absolute or contingent,
now or hereafter existing or owing to the Lender (all the foregoing obligations
and undertakings of the Borrower are collectively referred to hereinafter as the
"Obligations").
<PAGE> 2
(b) This Guarantee is an absolute, unlimited and continuing guaranty of
performance, payment and indefeasible receipt (and not of collection) of the
Obligations. This Guarantee is in no way conditioned upon any attempt to collect
from the Borrower or upon any other event or contingency, and shall be binding
upon and enforceable against the Guarantor without regard to the validity or
enforceability of the Loan Agreement or of any term thereof. Upon the failure
for any reason of the Borrower to duly and punctually pay or perform any
Obligation under the Loan Agreement, or, despite such payment or performance by
the Borrower, upon the failure of the Lender to receive the full amount of such
payment or performance, the Guarantor shall immediately pay or perform the same
directly to the Lender.
(c) In case the Loan Agreement shall be rejected or terminated by the
Borrower (as debtor in possession or otherwise), any trustee, receiver or
liquidating agent or custodian of the Borrower or the Borrower's respective
properties in any bankruptcy, insolvency, reorganization, arrangement,
composition, readjustment, liquidation, assignment for the benefit of creditors,
dissolution or similar case or proceeding, the Guarantor's obligations hereunder
shall continue to the same extent as if such agreement had not been so rejected
or terminated. The Guarantor agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment to
the Borrower or the Lender of the Obligations or any part thereof is avoided,
repaid or must otherwise be returned by the Borrower or the Lender in, or as a
result of, any claim, demand, action or proceeding made or commenced upon the
insolvency, bankruptcy, arrangement, composition, readjustment, liquidation,
assignment for the benefit of creditors or similar case or proceeding or
reorganization of the Borrower, or otherwise, as though such payment to the
Lender had not been made.
(d) The Guarantor shall pay all reasonable costs, expenses and damages
incurred (including, without limitation, reasonable attorneys' fees and
disbursements) of the Lender in connection with the enforcement of the
Obligations to the extent that such costs, expenses and damages are not
indefeasibly paid by the Borrower, and in connection with the enforcement of the
obligations of the Guarantor under this Guarantee.
2. Guarantee Not Subject to Set-Off, etc. The obligations of the
Guarantor hereunder shall not be subject to any counterclaim, setoff, deduction
or defense (other than payment, performance or affirmative discharge, release or
termination of this Guarantee by the beneficiaries thereof) based upon any claim
the Guarantor may have against the Lender or the Borrower or any other Person
and shall remain in full force and effect without regard to, and shall not be
released, discharged, reduced or in any way affected by any circumstance or
condition (whether or not the Guarantor shall have any knowledge or notice
thereof) whatsoever which might constitute a legal or equitable discharge or
defense including, but not limited to, (a) the amending, modifying or
supplementing, expressly or impliedly, of the Loan Agreement or any other
agreement referred to in the foregoing, or any other instrument applicable to
the Borrower or to its Obligations (as defined in the related Loan Agreement),
or to any part thereof; (b) any failure on the part of the Borrower to perform
or comply with any term of the Loan Agreement or any failure of any other Person
to perform or comply with any term of the Loan Agreement or any other agreement
as aforesaid; (c) any waiver, consent, change, extension, indulgence or other
action or any action or inaction under or in respect of the Loan Agreement or
any other agreement as aforesaid, or this Guarantee (except for any
<PAGE> 3
written waiver or modification of the provisions of this Guarantee signed by the
parties hereto), whether or not the Lender, the Guarantor or the Borrower has
notice or knowledge of any of the foregoing; (d) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation, assignment
for the benefit of creditors or similar case or proceeding with respect to the
Guarantor, the Borrower or their respective properties or their creditors, or
any action taken by any trustee or receiver or by any court in any such
proceeding; (e) any furnishing or acceptance of additional security or any
release of any security (and the Guarantor authorizes the Lender to furnish,
accept or release said security); (f) any lien, charge or encumbrance on or
affecting the Guarantor's or the Borrower's respective assets and properties;
(g) any act, omission or breach on the part of the Lender under the Loan
Agreement or on the part of the Borrower under the Loan Agreement or any other
agreement at any time existing between the Lender and the Borrower or any other
law, governmental regulation or other agreement applicable to the Lender, the
Borrower or any Obligation; (h) any claim as any result of any other dealings
among the Lender, the Guarantor, or the Borrower or any of them; (i) the
assignment or transfer of this Guarantee, the Loan Agreement (in each case in
accordance with and subject to the terms thereof) or any other agreement or
instrument referred to in the Loan Agreement or applicable to the Borrower or
the Obligations by the Borrower or the Lender to any other Person; or (j) any
change in the name of the Lender, the Borrower or any other Person referred to
herein.
3. Waiver. The Guarantor unconditionally waives: (a) notice of any of
the matters referred to in Section 2 hereof; (b) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including, without limitation, notice of the acceptance of
this Guarantee, or the creation, renewal, extension, modification or accrual of
the Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonor, protest or nonpayment of any damages or
other amounts payable under the Loan Agreement; (c) any requirement for the
enforcement, assertion or exercise of any right, remedy, power or privilege
under or in respect of the Loan Agreement, including, without limitation,
diligence in collection or protection of or realization upon the Obligations or
any part thereof or any collateral therefor; (d) any requirement of diligence;
(e) any requirement to mitigate the damages resulting from a default by the
Borrower under the Loan Agreement; (f) the occurrence of every other condition
precedent to which the Guarantor may otherwise be entitled, except as provided
in the Loan Agreement; and (g) the right to require the Lender to proceed
against the Borrower or any other Person liable on the Obligations, to proceed
against or exhaust security held from the Borrower or any other Person, or to
pursue any other remedy in the Lender's power whatsoever, and the Guarantor
waives the right to have the property of the Borrower first applied to the
discharge of the Obligations.
The Lender may, at its election, exercise any right or remedy it may
have against the Borrower or any security held by the Lender, including, without
limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of the
Guarantor hereunder, except to the extent the Obligations have been indefeasibly
received or satisfied, and the Guarantor waives any defense arising out of the
absence, impairment or loss of any right of reimbursement, contribution or
subrogation (to the extent not otherwise effectively waived herein) or any other
right or remedy of the Guarantor against the Borrower or any such security,
whether resulting from such election by the Lender or otherwise. The Guarantor
<PAGE> 4
waives any defense arising by reason of any disability or other defense of the
Borrower (which, in each case, may nevertheless be asserted in a separate action
or proceeding against the Lender or any other party), or by reason of the
cessation from any cause whatsoever of the liability, either in whole or in
part, of any Borrower to the Lender for its obligations under the Loan Agreement
(in each case, other than as a result of indefeasible receipt, performance or
affirmative discharge, release or termination of this Guarantee by the
beneficiaries thereof).
The Guarantor understands that the Lender's exercise of certain rights
and remedies contained in the Loan Agreement may affect or eliminate, to the
extent not otherwise effectively waived herein, the Guarantor's rights of
subrogation against the Borrower and that the Guarantor may therefore incur
partially or totally nonreimbursable liability hereunder; nevertheless, the
Guarantor hereby authorizes and empowers the Lender, its successors, endorsees
and/or assignees, to exercise in its or their sole discretion, any rights and
remedies, or any combination thereof, which may then be available, it being the
purpose and intent of the Guarantor that its obligations hereunder shall be
absolute, independent and unconditional under any and all circumstances.
The Guarantor assumes the responsibility for being and keeping informed
of the financial condition of the Borrower and of all other circumstances
bearing upon the risk of nonpayment or nonreceipt of the Obligations and agrees
that the Lender shall not have any duty to advise the Guarantor of information
regarding any condition or circumstance or any change in such condition or
circumstance. The Guarantor acknowledges that the Lender has not made any
representation to the Guarantor concerning the financial condition of the
Borrower.
4. Representations and Warranties of the Guarantor. The Guarantor
repeats and restates all of the representations and warranties of the Operating
Partnership, as defined in the Stock Purchase Agreement, set forth in Article 3
of the Stock Purchase Agreement, all of which are deemed to be incorporated by
reference into this Guarantee as if such representations and warranties were set
forth in full herein.
5. Payments. Each payment by the Guarantor to the Lender under this
Guarantee shall be made by transferring the amount thereof in immediately
available funds without setoff or counterclaim; provided that, no such payment
shall be deemed a waiver of any rights the Guarantor may have.
6. Parties. This Guarantee shall inure to the benefit of the Lender and
its successors, assigns or transferees, and shall be binding upon the Guarantor
and its successors and assigns. The Guarantor may not delegate any of its duties
under this Guarantee without the prior written consent of the Lender and any
Person to whom the Lender has assigned this Guarantee. Upon notice to the
Guarantor, the Lender and its successors, assigns and transferees may assign its
or their rights and benefits under this Guarantee to any financial institution
providing financing to the Lender in connection with the Loan Agreement.
7. Notices. All notices, demands and other communications from and
between the Lender and the Guarantor under this Guarantee shall be in writing
(including telecopier) and shall be delivered or sent to the address or
telecopier number shown below, or to such other address or
<PAGE> 5
telecopier number as any party hereto may by written notice to the other parties
have designated for such purpose. Any such notice, demand or other communication
shall not be effective until actually received.
If to the Lender:
Patrick K. Fox
Principal & General Counsel
Westbrook Partners, LLC
14400 North Dallas Parkway, #200
Dallas, Texas 75240
with a copy to:
Keith Gelb
Vice President
Westbrook Partners, LLC
11150 Santa Monica Boulevard
Los Angeles, California 90025
and another copy to:
Allen Curtis Greer, II
Rogers & Wells
200 Park Avenue
New York, New York 10166
If to the Guarantor:
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
Attention: Keith Guericke
with a copy to:
Michael Schall
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
<PAGE> 6
and another copy to:
Jordan Ritter
Essex Property Trust, Inc.
777 California Avenue
Palo Alto, CA 94304
8. Remedies. The Guarantor stipulates that the remedies at law
in respect of any default or threatened default by the Guarantor in the
performance of or compliance with any of the terms of this Guarantee are not and
will not be adequate, and that any of such terms may be specifically enforced by
a decree for specific performance or by an injunction against violation of any
such terms or otherwise.
9. Rights to Deal with the Lender. At any time and from time to time,
without terminating, affecting or impairing the validity of this Guarantee or
the obligations of the Guarantor hereunder, the Lender may deal with the
Borrower in the same manner and as fully and as if this Guarantee did not exist
and shall be entitled, among other things, to consent to any grant by the
Borrower, without notice or demand and without affecting the Guarantor's
liability hereunder, to grant extensions of time to perform, renew, compromise,
accelerate or otherwise change the time for payment of or to otherwise change
(or to consent to the change of) the terms of payment or any part thereof
contained in or arising under the Loan Agreement, or to waive any Obligation of
the Borrower to perform, any act or acts as the Lender may deem advisable.
10. Subrogation. The Guarantor irrevocably waives any and all rights to
which it may be entitled, by operation of law or otherwise, upon making any
payment hereunder to be subrogated to the rights of the payee against the
Borrower with respect to such payment or otherwise to be reimbursed, indemnified
or exonerated by the Borrower in respect thereof until such obligations have
been performed and paid in full.
11. Survival of Representations, Warranties, etc. All representations,
warranties, covenants and agreements made herein and in statements or
certificates delivered pursuant hereto shall survive any investigation or
inspection made by or on behalf of the Lender and shall continue in full force
and effect until all of the obligations of the Guarantor under this Guarantee
shall be fully performed in accordance with the terms hereof, and until the
indefeasible receipt and performance in full of all Obligations.
<PAGE> 7
12. Governing Law and Consent to Jurisdiction; Waiver of Jury Trial.
(a) THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY
AND COUNTY OF NEW YORK] IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS GUARANTEE OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE OR ANY DOCUMENT OR ANY INSTRUMENT
REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY
SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR AGREES NOT
TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH
COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON
TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE GUARANTOR AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR
NOTICES SET FORTH IN THIS GUARANTEE OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW
YORK.
(b) The parties hereto knowingly, voluntarily and expressly waive all
right to trial by jury in any action, proceeding or counterclaim enforcing or
defending any rights arising out of or relating to this Guarantee or the
transactions contemplated hereby. The Guarantor acknowledges that the provisions
of this Section 12(b) have been bargained for and that it has been represented
by counsel in connection therewith.
13. Miscellaneous. If any term of this Guarantee or any application
thereof shall be invalid or unenforceable, the remainder of this Guarantee and
any other application of such term shall not be affected thereby. Any term of
this Guarantee may be amended, modified, waived, discharged or terminated only
by an instrument in writing signed by the Guarantor and the Lender, and
consented to by any assignee. The headings in this Guarantee are for purposes of
reference only and shall not limit or define the meaning hereof. This Guarantee
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall constitute one instrument. Capitalized
terms used herein and not defined shall have the respective meanings assigned to
such terms in the Loan Agreement.
<PAGE> 8
IN WITNESS WHEREOF, the undersigned have caused this Guarantee to be
executed and delivered as of the day and year first above written.
ESSEX PORTFOLIO L.P., a California limited
partnership, as Guarantor
By: Essex Property Trust, Inc.,
a Maryland corporation
General Partner
By: /s/ Jordan E. Ritter
----------------------------------------
Name: Jordan E. Ritter
---------------------------------
Title: Vice President
--------------------------------
Acknowledged and Agreed:
T/W ESSEX FUNDING, L.L.C.
By: Essex/TW Funding Corp.,
a Delaware corporation
Managing Member
By: /s/ Jeffrey Kaplan
-------------------------------
Name: Jeffrey Kaplan
------------------------
Title: Vice President
-----------------------
<PAGE> 1
REAFFIRMATION OF GUARANTEE
THIS REAFFIRMATION OF GUARANTEE ("Reaffirmation"), dated as of July 1,
1996, is made by ESSEX PORTFOLIO, L.P., a California limited partnership (the
"Guarantor").
W I T N E S S E T H:
WHEREAS, Essex Property Trust, Inc. (the "Borrower") previously entered
into that certain Loan Facility Agreement (the "Loan Agreement") dated as of
June 20, 1996, with T/W Essex Funding, L.L.C., a Delaware limited liability
company (the "Lender");
WHEREAS, pursuant to that certain Guarantee (the "Guarantee"), dated as
of June 20, 1996, the Guarantor guaranteed to the Lender that, among other
things, the due and punctual performance of and compliance by the Borrower of
its obligations, covenants and undertakings contained in or arising under the
Loan Agreement;
WHEREAS, pursuant to that certain Amendment No. 1 to the Loan Facility
Agreement (the "Amendment"), dated as of even date herewith, by and between the
Borrower and Lender, Lender has agreed, among other things, to amend and modify
the Loan Agreement as set forth therein. In order to induce Lender to enter into
the Amendment, Guarantor desires to reaffirm the Guarantee.
NOW, THEREFORE, in consideration of the foregoing, and in order to
induce the Lender to enter into the Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
further acknowledging that Lender intends to rely on the Guarantee of the
Guarantor hereunder, the Guarantor hereby agrees as follows:
1. Guarantor represents that it has reviewed the
Amendment and all other documents required to be delivered by Borrower to Lender
in connection with the Amendment.
2. Guarantor reaffirms all its obligations under the
Guarantee.
3. Guarantor acknowledges and agrees that such Guarantee
remains in full force and effect, and such Guarantee is hereby ratified and
confirmed.
4. Guarantor acknowledges and agrees that nothing
contained in this Reaffirmation shall be construed as a limitation of or
derogation from any of the terms and provisions of the Guarantee.
* * *
1
<PAGE> 2
IN WITNESS WHEREOF, the Guarantor has duly executed this REAFFIRMATION
OF GUARANTEE as of July 1, 1996.
GUARANTOR:
ESSEX PORTFOLIO L.P., a California limited
partnership, as Guarantor
By: Essex Property Trust, Inc.,
a Maryland corporation
General Partner
By: /s/ Michael Schall
--------------------------------------
Name: Michael Schall
--------------------------------
Title: CFO
-------------------------------
Acknowledged and Agreed:
T/W ESSEX FUNDING, L.L.C.
By: Essex/TW Funding Corp.,
a Delaware corporation
Managing Member
By: /s/ Keith Gelb
----------------------------
Name: Keith Gelb
----------------------
Title:
----------------------
2
<PAGE> 1
EXHIBIT 7.4
-----------
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
Dated: September 29, 1997
WESTBROOK REAL ESTATE PARTNERS, L.L.C.
By:/S/ PATRICK K. FOX
---------------------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
WESTBROOK REAL ESTATE PARTNERS
MANAGEMENT I, L.L.C.
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By:/S/ PATRICK K. FOX
-----------------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
WESTBROOK REAL ESTATE FUND I, L.P.
By: Westbrook Real Estate Partners
Management I, L.L.C., General Partner
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By:/S/ PATRICK K. FOX
-----------------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
WESTBROOK REAL ESTATE CO-INVESTMENT
PARTNERSHIP I, L.P.
By: Westbrook Real Estate Partners
Management I, L.L.C., General Partner
By: Westbrook Real Estate Partners, L.L.C.,
Managing Member
By:/S/ PATRICK K. FOX
-----------------------------------------
Name: Patrick K. Fox
Title: Attorney-in-Fact
<PAGE>
/S/ GREGORY H. HARTMAN
-------------------------------------------------
Gregory H. Hartman
/S/ JEFFREY M. KAPLAN
-------------------------------------------------
Jeffrey M. Kaplan
/S/ PAUL D. KAZILIONIS
-------------------------------------------------
Paul D. Kazilionis
/S/ JONATHAN H. PAUL
-------------------------------------------------
Jonathan H. Paul
/S/ WILLIAM H. WALTON III
-------------------------------------------------
William H. Walton III
